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Here’s How Student Loan Exit Counseling Works — and Why It’s Important

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As graduation approaches, you might be feeling clueless about your student loans. Fortunately, student loan exit counseling helps you figure out the next steps. Federal student loan exit counseling covers your repayment options, rights and responsibilities and is required for all borrowers with federal student loans, such as Direct or PLUS loans.

Read on to learn how to do exit counseling for student loans as you transition away from college.

What is student loan exit counseling?

Student loan exit counseling is meant to teach you how to handle your student loan debt. Anyone with Direct Loans, Federal Family Education Loans (FFEL) or PLUS Loans must complete exit counseling for student loans after leaving school.

While there’s no universal student loan exit counseling deadline, there are three scenarios when you must complete it. These include:

  • Graduating from college
  • Withdrawing from college
  • Dropping below half-time enrollment

You have a couple of options to complete exit counseling for your student loans. You could simply sign into your account at and complete the process online. Online exit counseling usually only takes about 20 or 30 minutes. Alternatively, some schools offer in-person exit counseling sessions. These might take place one-on-one or in a group setting. In-person student loan exit counseling can be helpful if you have questions about your specific situation. 

Check your school’s website to see how it handles student loan exit counseling. If you can’t find this information online, get in touch with your financial aid office.

How to do exit counseling for student loans: 5 steps

After you complete exit counseling for student loans, you should feel prepared to tackle your student debt. Here’s an exit counseling guide for federal student loan borrowers who want to learn how the process works, step by step:

1. Review the basics of your student loans

The first part of federal student loan exit counseling goes over the basics of student loans. At the top of this page, you’ll see your total federal student loan balance.

Then, you’ll get an overview of each type of federal student loan. You’ll learn about subsidized and unsubsidized Direct loans, FFELs, Grad PLUS loans and federal Perkins loans.

This section of exit counseling also reviews how student loan interest works. Keep an eye out for the current interest rates of each type of loan you have.

All of this information should basically be a repeat of what you learned during student loan entrance counseling. It goes over the basics to make sure you understand what loans you have and how they work.

Once you’ve read this information, move onto part two to learn about your repayment options.

2. Learn about your options for repayment

The second stage of exit counseling is probably the most useful. It goes over all of your options for student loan repayment, including the standard plan and income-driven repayment.

This stage also has a repayment calculator so you can estimate your monthly payments on each plan. You’ll enter information like your projected annual income and monthly housing costs.

Then, the calculator will balance your other expenses with your student loan payments. You can compare plans to see which one best fits within your budget.

A second calculator shows how much you’ll save by paying interest during the grace period. Even though you may not have to immediately start making student loan payments, the earlier you start, the more money you’ll save.

The final interactive tool shows how much you could save by making extra payments toward your student loans. If you can swing it, a regular extra payment each month could shave years off your plan (and thousands of dollars from the total cost).

Beyond these calculators, you’ll also get some extra loan payment tips. For instance, you’ll learn about the 0.25% interest rate deduction you can likely score if you set up automatic withdrawals.

This step is one of the most important parts of exit counseling. Make sure to review the information thoroughly so you know which student loan repayment plan is right for you.

Note that you can change your plan in the future if your circumstances change. Some borrowers even refinance their student loans and switch to a new lender.

3. Read tips on avoiding default

The third stage of student loan exit counseling is all about avoiding default. It teaches you about your options if you run into financial hardship.

Instead of bailing on your student loans — which has a number of consequences — you might consider putting your loans into deferment or forbearance. These two options temporarily pause your payments.

That being said, student loan interest will continue to accrue in most cases. The tool below estimates how much interest will add up if you pause your student loan payments.

You’ll also learn about the benefits of federal loan consolidation. While consolidation won’t save you money, it will combine multiple student loans into just one. As a result, it will be easier to keep track of your bill and due date.

This step also goes over your options for federal loan forgiveness and discharge. Forgiveness programs include Public Service Loan Forgiveness (PSLF) and Teacher Loan Forgiveness.

You might also qualify for loan discharge if your college closes or you have a disability. This information is most useful for borrowers who are worried about their ability to pay back their loans.

4. Get advice about financial planning

The next stage in exit counseling asks you to think about your personal finances. It goes over how to plan for the future and set long-term financial goals.

These are a few of the key takeaways in this step:

  • Build up a three- to six-month emergency fund
  • Create a monthly spending plan
  • Pay off your full credit card balance every month
  • Establish and build up your credit score

Although the information on this page is pretty basic, it contains the central tenets of good money management. This page also encourages you to be more aware of your spending and saving habits.

5. Update your contact information

This final step has some action items for you. Here, you’ll put what you learned from federal student loan exit counseling into practice by choosing your repayment plan. Note that your federal loan servicer will still have to review your information to approve your repayment plan request.

You’ll also enter your most recent contact information. Lots of people move and change their emails after graduation. This step ensures your loan servicer has your most up-to-date information.

If you already have a job lined up, you’ll also enter your employer’s information. You’ll additionally write in the contact information for a relative and two references. In the case of default, the loan servicer will call your references to track you down.

Make sure to review this page before you hit submit. If you need to update your information later, you can sign into your account to do so. And if your income changes, speak with your loan servicer about your options.

After you finish filling out your information, you’re all finished with student loan exit counseling. Once your loan servicer approves your repayment plan, you’ll be ready to enter repayment on the first due date.

Stay informed about your student loan repayment options

Student loan exit counseling is a helpful introduction to student loan repayment. But it doesn’t go over everything, such as how to save money on student loans.

Refinancing with a private lender, for instance, can lower your interest rate and monthly payments. Plus, a number of states offer loan repayment assistance programs (LRAPs) in exchange for service.

While exit counseling is important, it doesn’t tell you every option for student loan repayment. Seek out other trusted resources for even more tips on paying off student loans.


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