How Student Loan Exit Counseling Works: A Complete Guide

Federal student loans made up 24% of all undergraduate student aid in the 2023-24 year, according to the latest research from the College Board. If you're a federal student loan borrower, you must complete student loan exit counseling when you graduate, leave school, or drop below half-time. The goal of student loan exit counseling is to properly prepare you for managing and repaying your federal student loans.

In this guide, find out more about how student loan exit counseling works and what you can expect.

What is student loan exit counseling?

Student loan exit counseling educates and informs federal student loan borrowers about their rights and responsibilities heading into repayment. It's a required training that's completed online after a student graduates, leaves school, or changes their enrollment status to below half-time.

Repaying federal student loans can be a complex and confusing process for borrowers. Student loan exit counseling goes over different repayment options, the consequences of late payments, important terms and definitions, and what to expect with repayment going forward.

What to expect during student loan exit counseling

Student loan exit counseling includes various sections, which you can access online via the StudentAid.gov exit counseling page. Be aware that you must complete it in one session, which will take about 30 minutes.

You'll first select whether you're an undergraduate or graduate student. You'll then use your Federal Student Aid (FSA) ID, email, or phone number to log in and complete the mandatory student loan exit counseling session.

The following sections are covered during student loan exit counseling:

• Contact Settings: In the first section, you'll confirm your current contact information, including address, email, and phone number, and provide references. You'll also notify your school that you're completing exit counseling and select one of the reasons you must complete it, such as graduating or withdrawing.
• My Loans: In the next section, you'll review the details of your federal student loans. You'll see how much you owe, when to pay, and learn different loan terminology. Additionally, this part will cover how interest accrues, what interest capitalization is, and when it happens. 
• Preparing to Repay: Then you'll go over your rights and responsibilities as a federal student loan borrower. You'll also find out who your loan servicer is (the entity that you make your monthly payments to) and how to start making payments. You must create an account with your loan servicer, provide your bank account information, and sign up for automatic payments or make manual monthly payments. This section also covers the various benefits and options you have as a federal student loan borrower, and the consequences of student loan default.
• Determining Your Repayment Strategy: You'll provide information about your marital status, tax filing status, and dependents, and include your employment and income information, if applicable. This section also covers your repayment goals and strategies to help you decide the repayment plan that works best for you.
• Final Steps: The last section summarizes what's covered in the training and outlines the next steps and what to expect.

Preparing for student loan repayment

Exit counseling for federal student loans has one goal - preparing you for student loan repayment. You'll go over loan terms, interest rates, and the repayment plans available to you.

Some terminology you'll learn includes:

• Principal: The initial amount you borrowed in federal student loans.
• Interest rate: The percentage of the principal balance that you'll pay as the cost of borrowing. Federal student loans have fixed interest rates.
• Total balance: The total amount you owe, including the principal amount and any interest accrued.

You'll also learn about how you can pause your monthly payments in certain situations through deferment or forbearance, as well as the various repayment plans available to you.

Repayment plans

The Standard Repayment Plan is the default repayment plan for federal student loans. It helps you pay off your loan balance in 10 years, and this plan accrues the least amount of interest. However, the monthly payments could be higher than you can afford.

In that case, you may want to consider one of the income-driven repayment (IDR) plan options. These plans can help reduce your monthly payments and limit how much you pay based on your income. You'll pay between 5% and 20% of your discretionary income, depending on the plan.

Tools provided during exit counseling

While going through student loan exit counseling, you'll have access to a loan repayment calculator that helps you see how much interest you'll pay per day, per month, and at the end of your grace period. You can also see how much interest you'd save if you make early payments.

Additionally, there's a tool that shows you how much interest you'll pay if you pause your loans through either deferment or forbearance.

Through student loan exit counseling, you'll also learn about the different options for student loan forgiveness, including the Public Service Loan Forgiveness (PSLF) program, Teacher Loan Forgiveness, and income-driven repayment plan forgiveness.