Mandatory Federal Student Loan Counseling

Another way students learned about federal loans was through mandatory student loan counseling. Current federal requirements include entrance counseling and exit counseling. Entrance counseling essentially informs students that loans must be repaid, but does not provide practical advice about understanding the costs of repayment or whether they got the best possible deal on their loan. Exit counseling occurs right before the student graduates and after the student is legally obligated to pay back their loans. Exit counseling provides students with information on repayment (e.g., when it begins, repayment amounts, etc.) and information about conditions under which deferments, forbearance, consolidation, cancellation, and forgiveness can be granted.

Current students discussed how counseling, both online and in person, during their first year had not been meaningful to help them make informed borrowing decisions. Typical of the comments made was one by a senior at a public fouryear university in Atlanta. She described her online entrance counseling as “just something I needed to do to get my money.” She went on further to state that the counseling took the form of “a quiz where you didn’t even have to really read it, as you could go back and change [your] answers.”

Current students could not recall the content of the entrance counseling other than the idea that loans must be repaid. They stated that the timing of the counseling -- usually during freshmen orientation -- had not been an appropriate time to convey this material. A freshman at a four-year private university in Atlanta summed it up when he explained, “[its] kind of like a buzz kill in the middle of the second day [of freshmen orientation], everybody’s all wound up already, they’re not going to pay attention.”

Recent graduates suggested that the federally required exit counseling was useful, but that it had come too late for them to change their borrowing behavior. Once they received their counseling, they could not reduce the amount they had borrowed or obtain better terms on their existing student loans.

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