If you take out federal student loans for college, you’ll be legally mandated to complete exit counseling either online at StudentAid.gov or based on the expectations set by your school (unless you’re a parent borrower of Parent PLUS loans). The exit counseling will take place when you graduate, leave school at any point, or drop below a half-time course load.
This step in the financial aid process is meant to help you understand the amount of federal student loans you owe, all the loan repayment options that could be available to you, and your rights regarding your federal student loans.
Continue reading to learn about exit counseling, when you’ll need to complete this, and what happens if you don’t.
Just like entrance counseling, which is required to receive your federal student loan money as you begin college, you'll need to complete exit counseling when you leave school or drop below half-time enrollment. Keep in mind that exit counseling is still required even if you leave school without completing your degree or if you’re leaving your school to complete your degree elsewhere. Parent borrowers of Parent PLUS loans aren’t required to complete exit counseling.
Student loan exit counseling generally takes 20 to 30 minutes and must be completed in one session. If you’re completing the exit counseling online at StudentAid.gov, you’ll choose your exit counseling path based on whether you’re an undergraduate, graduate, or professional student. Check with your school’s financial aid office to ensure you know what the expectation is as far as how to complete exit counseling.
During your exit counseling, you’ll receive information on repayment options, interest rates, and tips for avoiding delinquency and default. After completing your exit counseling, you’ll need to choose a repayment plan and consider the possibility of student loan consolidation if it applies to you.
You can select an extended repayment plan if you have more than $30,000 in federal student loans. If you have less than $30,000 in federal student loans, you can choose from a standard, graduated, or income-driven repayment plan.
To complete your exit counseling, you’ll need the following:
If you’re a student who has a federal subsidized or unsubsidized loan, you’re legally mandated to complete exit counseling when you:
Parent PLUS loan borrowers aren’t required to complete exit counseling.
As covered above, if you have a federal student loan, you’re required by federal law to complete student loan exit counseling. Failure to complete exit counseling could mean your school may withhold your official transcript and diploma. If this is the case, you may still be allowed to walk in your school’s graduation, but each school handles this differently.
That said, there could still be repercussions to this. In the case of undergraduates wanting to apply to graduate school, this could impact their ability to apply to graduate programs. For students applying for jobs, it could affect their ability to apply for jobs that require a diploma or a transcript. There could be other consequences, too, from not having a transcript or diploma.
Exit counseling is meant to help students understand their student loans and their repayment options. Here are some important terms to understand during exit counseling and beyond if you have federal student loans.
The period when you don’t have to make student loan payments is referred to as a deferment. Students attending college (enrolled at least half-time) aren’t required to make payments on their federal student loans, and this is called being in deferment. Students experiencing unemployment or economic hardship may also be able to pause payments on their federal student loans.
The government pays the interest while a federal student loan is in deferment if you have a subsidized Stafford loan. If you have an unsubsidized federal student loan, you can either pay the interest as it accrues on the loan or postpone your interest payments during the deferment and resume making them once the deferment period is over.
Forbearance is similar to deferment and is granted when you’re experiencing temporary problems repaying your student loans and aren’t eligible for a deferment. Even if you have a subsidized loan, you'll always have to pay the interest that accumulates. You can choose to do this as the interest accumulates or have the interest added to your outstanding loan balance.
There are two types of forbearance: general and mandatory. With “general,” the loan servicer decides whether to grant forbearance. With “mandatory,” those who meet the eligibility requirements must be granted forbearance.
A Direct Consolidation Loan allows you to combine eligible federal student loans into a single loan to lower your monthly payment amount potentially, simplify your loan payments, and possibly access federal forgiveness programs. This option is available for most federal student loans, but not all.
Loan forgiveness, cancellation, and discharge remove a borrower's obligation to repay all or a portion of a loan. Student loan borrowers may be eligible for student loan forgiveness, cancellation, and discharge for different reasons, including obtaining specific jobs after graduation, if the school they attended closes, or if they have a disability, among other reasons.
If your federal student loan defaults, that means you're 270 days behind on your loan payments. If you default on your federal student loans, you may be reported to national credit bureaus, your wages can be garnished, your income tax refund can be withheld, and you might not be able to receive student aid if you choose to go back to school.
Make sure your loan servicer always has your current address and contact information, and contact your loan servicer if you’re unable to make payments. They may be able to grant you a forbearance or help you avoid defaulting.
Of note, private student loan lenders may define default differently.
Exit counseling is required to remind students about the importance of making student loan payments on time and allows them to choose a repayment plan, among other reasons. If you’re graduating soon or expect to undergo exit counseling for different reasons, contact your school’s financial aid office to get any lingering questions about it answered ahead of time.
