Simply put, loans exit counseling is a guide for students who have student loan debt on how such loans should be handled. The main goal of this counseling is to enhance the comprehension of the student on the responsibilities involved in the repayment of the federal student loan. Those involved are made aware of the consequences of defaulting on payment and the need to make payment a priority. It is a mandatory requirement by law that students go through this counseling under these three circumstances:
- After completion of college
- If one has to withdraw from college.
- If a student drops below the half-time enrollment.
Why Federal Student Loans Exit Counseling is Important
Most students sign on the loan papers without an idea of how much they owe. Others have not kept track on the total amount over the period that they have been learning. The exit counseling is the right time to find out how much you owe and the amount of monthly payment you are expected to pay.
Besides, it is a chance for you to work on a strategy on how to pay back the loan. However, you need to be calm as you work on the most practical payment option depending on your financial circumstances.
It is also a chance to gain some knowledge on how to deal with general financial matters. Some institutions have found it critical to enlighten students on general financial matters as part of the exit counseling federal student loans. These include things like how to use a credit card and budgeting skills. This is important for any student graduating from college.
Moreover, it helps students get the updated contact information of the servicing company. It is common for a student to fail to pay their first amount because they fail to receive their billing. It is important to provide your email address during this session so that you can receive important information from the services provider. You may also have questions on how to change your payment plant. If you do not have the contacts of the manager, you may find it difficult to go about it. Exit counseling for student loans is a chance to give and receive these important pieces of information.
The Procedure on How to Do Exit Counseling for Student Loans
Many people find it quite cumbersome to get well-accustomed in the topic. However, the exit counseling happens only in 5 stages:
- Understanding the loan
First, the student has to have an idea of the basics of the loan. The page shows the student the total balance and the loan type. The student is also shown how the interest operates. You will learn about how the loan operates.
- Learn about the available payment options
At this stage, you are shown the payment options that you can use. The options include the income-driven option, the standard plan among the others. The repayment calculator helps you know the amount you are likely to pay monthly should you choose a given payment option. In other words, the calculator helps you decide on the payment option to use. You can use the calculator to determine the amount payable monthly based on your projected monthly income and expenses. Based on your budget, you can settle on the most approachable plan. There is another calculator that enables you to determine the amount you are likely to save should you decide to pay the interest during the grace period. Furthermore, there is a calculator that calculates for you the amount you will save should you decide to pay more than the stipulated amount every month. Carefully review all these payment options during the exit counseling loans to determine which one suits you. However, you can change in the future should your financial circumstances change.
- Vital info on how to avoid defaulting
At this stage of the exit loan counseling student loans, the payment can be paused for a while through measures such as deferment or forbearance. With these measures, the interest is still accrued on loan. All your loans can also be consolidated so that you can find it easy to track on the due date. There is also an option for loan forgiveness.
- Education on proper financial planning
The next step of federal loans exit counseling educates the student on how to make financial plans so that they can comfortably pay the loan in the long run. The information may seem obvious but go a long way in ensuring you are more prudent when spending.
- Updating your personal information
You then choose the payment information that suits you after the exit counseling federal loans. The approval of the chosen payment plan is at the discretion of the servicer after they review your information. You then update your contact information to enable the servicer to send the billing form to you.
How to Make Exit Counseling Student Loans More Effective
Exit counseling for federal student loans is often shrouded in a lot of mystery given the difficult terms used when explaining the different aspects to students. Those involved with educating students should make these terms more comprehensible so that the students find this information easy to access. Make students understand through the exit counseling student loans gov that faster payment is meant to make the process of choosing easier. This makes the student understand that paying this money on time can enable them to save for the further investment. Handle the information with a personal touch on the specific situation of the student. Avail all of the facts so that they can make a more informed payment decision.