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When it’s time to start paying off your federal student loans, you’ll take a short course on how to prepare for and start making monthly payments called Student Loan Exit Advice. This is a 20-30 minute online course designed to teach you the basics of paying off federal student loans and budgeting for your finances.
Am I required to follow exit advice?
The US Department of Education offers exit counseling, and this is required for student loan borrowers when they fall below part-time status (excluding summer vacation), graduate or drop out of school for some other reason. Nor is it necessarily a one-time process; if you drop below half-time status more than once, you will have to retake the course. You may be contacted by your school within 30 days of your withdrawal or graduation to remind you to complete the online session.
Exit counseling is required of all students who receive subsidized or unsubsidized direct student loans, PLUS loans or federal loans for family education (FFEL). Private student loan borrowers do not have to complete the counseling session.
How to Prepare for Exit Counseling
Since the exit tips are designed to help you prepare for loan repayment, it is helpful to collect information on post-graduation income (if known) and living expenses. The exit counseling session offers calculators to enter these numbers, along with your student loan payments, to see what your overall budget will look like.
You can estimate future income and living expenses before using the tool without knowing your salary. Ask your college’s career office for the average graduate salaries for your major. Also, ask the career office to help you make a plan for finding a job in your field if you don’t already have one.
When it comes to living expenses, start by researching local rent in the areas where you plan to live. You can also call the utility companies in the cities you are considering to find out the average utility bills based on the size of the home. If you’re stuck and need help, campus credit unions and student budgeting bureaus can help you estimate living expenses and create budgets.
Make sure you have your FSA ID handy because you will need it to log in to your exit counseling session. If you forgot your password, the password recovery process may take a few days.
How the exit board works
First of all, you need to log in to the Federal student aid website with your FSA ID. If you don’t, you will not be able to prove that you have taken the course. When you select the exit tip, you start a 20-30 minute session. You must complete the course in one sitting.
Your federal student loan information is imported into the system, so you won’t have to provide these details. At the end you can choose your repayment plan after calculating the payment options during the course. These options range from standard 10-year repayment plan To income-based repayment plans that offer a potential loan discount and take into account your discretionary income when determining monthly payments.
Note: Just because a list of your student loans is imported from the National Student Loans Data System does not mean that the list is complete. Check to make sure there are no missing loans.
If one of your loans is not on the list, call the Federal Financial Assistance number at (800) 433-3243. You don’t want to inadvertently default on a loan because you didn’t know it existed.
5 go-out tips to go
Exit advice covers much more than the basics of student loans. You’ll learn important tips on budgeting, lowering healthcare costs, and paying off your student loans faster.
Monitor your student loan balance
The Federal Student Loans Exit Board details the amount you owe in Federal Student Loans. It doesn’t include private student loans, so you need to budget for them separately.
Beyond tallying your student loan debt, there are reminders to minimum borrowing in the future. You can borrow again, for example, if you finish your studies after a break or if you go on to graduate school. To help you understand the federal student loans you have, the counseling session provides an explanation of the types of student loans and their interest rate. You will also learn how interests run.
Calculate how much you can afford to pay
You will use calculators to estimate payments under different repayment plans, taking into account your after-tax income, budget, and student debt burden. You will also receive advice on which plan you should choose based on affordability and advice on when to start making payments.
Among the repayment tips, you will find a useful calculator to pay off your loans faster by make additional payments, benefiting from a 0.25% discount on the interest rate by choosing automatic payments or by making a single payment to reduce your loan balance. As you enter your choices, the calculator displays how much you will save in time and interest payments.
You shouldn’t pay off loans sooner than qualify for forgiveness through income-based repayment plans, Public Service Loan Discount (PSLF) or other loan forgiveness options. You risk costing you money unnecessarily.
Learn how to avoid faults
To avoid defaulting on your student loans, you’ll need to take care of your general finances and pay close attention to your student loans. Typically, you’ll miss nine monthly payments on a federal student loan, but you can also have multiple defaults. Each loan has a separate payment record and can affect your credit report, although some of the credit consequences can be reversed by loan rehabilitation.
The counseling session offers several tips for avoiding payment defaults, including completing your degree, paying on time if possible, calling your repairman about carry over options and paying attention to any communication that loan services send to you.
Follow basic budgeting tips
If you follow good overall budgeting practices, you will likely be able to pay off your student loans. The counseling session offers advice on budgeting and setting short and long term goals, avoiding using credit cards for basic expenses and increasing your credit score.
Choose your repayment plan carefully
In the final section, you will be asked to enter some personal information to help compare and further calculate payment amounts and repayment plan options. Make sure you finish this section slowly. At the end, you will be able to choose the repayment plan that works best for you. Your response will be evaluated by your loan manager for approval.
That moment when you see all the student loan debt you’ve racked up over your college career can be a little scary, especially if you haven’t started your first job after graduation. The Federal Student Loan Exit Board makes it easy to get started with loan repayment with a full range of budgeting and loan calculators.
Since this online session is only about 30 minutes long, take the time separately to browse StudentLoans.gov to learn as much as you can about loan repayments. Also, consider making an appointment with your school’s financial aid office for additional advice.
You can change the repayment plan you select later, but preparing now could make your repayment process easier for years to come.