Exit counseling is the required session Direct Loan borrowers must complete when they graduate, withdraw, or drop below half-time enrollment.
How it works
The institution identifies borrowers who are about to graduate or who have withdrawn. It directs them to the Federal Student Aid exit-counseling site or provides equivalent materials. Completion is documented. If a student leaves without completing the session, the institution sends the required information. Servicers later contact the borrower to begin repayment after the grace period.
Example: an online student completes a bachelor’s degree in May. In April the institution emails instructions to finish exit counseling. The student completes the session, reviews a projected monthly payment under the standard plan, and updates a mailing address. Repayment begins after the six-month grace period.
How it differs
Entrance counseling occurs before the first disbursement. A grace period is the six months after leaving school before repayment starts; exit counseling prepares the borrower for that transition. Loan consolidation or income-driven repayment enrollment are optional actions the borrower may take later; they are not part of exit counseling itself.
Common errors
Assuming exit counseling cancels or reduces the loan balance. Waiting until after the grace period has ended to complete it. Believing that unofficial withdrawal exempts the borrower from the requirement.
References
- 1. Federal Student Aid exit counselingRequired when leaving school
- 2. 34 CFR 685.304Timing and content
Exit counseling is the required session Direct Loan borrowers must complete when they graduate, withdraw, or drop below half-time enrollment.