Life after college can be a difficult time full of changes. If you have federal student loans, they’ll go into repayment six months after you leave school or go under half-time enrollment, and that can be a big transition both financially and personally.
To complicate matters further, many student loan borrowers find towards the end of their schooling that they have forgotten the information needed to manage outstanding student loans, especially borrowers who have started their studies there. four or more years ago.
This is where the Federal Council comes in on the exit of student loans. You have probably learned a lot during your input tips early in your school journey when you took on federal student loans, but you might have forgotten some of this knowledge along the way. Exit advice can be a great reminder of some key things you need to know to pay off your student loans.
Exit counseling is required for all federal student loan borrowers. Borrowers who have received a subsidized, unsubsidized, or PLUS loan under the Direct Loan program should follow exit tips when they fall below half-time enrollment, drop out of school, or graduate. . Private student loan borrowers without federal loans are not required to follow federal student loan exit advice, but may be required to follow a similar program offered by their lender.
Exit advice is provided online and typically takes around 20 to 30 minutes. Like entry advice, exit advice topics include: understanding your loans, planning for repayment, avoiding defaults, and making finances a priority.
With so many competing demands on your time, it can be tempting to consider student loan exit advice just one more item on your to-do list and rush through the session as quickly as possible. But the information it provides can help you prepare to pay off your federal student loans, so you need to slow down and make sure you absorb it.
The Federal Student Loan Exit Council is worth your time because it can help you:
- Learn key terms and vocabulary.
- Understand your loan repayment terms and your plan options.
- Learn how to avoid faults.
- Get financial planning advice.
Learn key terms and vocabulary
Learning how to manage student loan repayments can sometimes feel like you speak a foreign language. There are so many terms that may seem unfamiliar to you, especially if a student loan is your first financial product. Not taking the opportunity to familiarize yourself with the related terminology can lead to confusion and frustration down the road, especially if you wait until you have to resolve a problem.
Exit advice is an opportunity to review key student loan terms and financial vocabulary – such as endorser, forbearance, and annual percentage rate – that you likely encountered on the entry council but you may have forgotten. For quick reference, the Federal Student Aid website also maintains a glossary of these terms which you may refer to later.
Understand your loan repayment terms and plan options
Navigating federal student loan repayments can be complicated. Beyond the standard 10-year repayment plan, the federal student loan program has several other repayment plans that you can choose from, and it’s important to understand the pros and cons of each when making your selection.
Student loan exit counseling allows you to learn more about these repayment plans and choose one that matches your goals. For example, standard repayment is the fastest and most economical way to pay off your student loans. Depending on your financial situation, however, you might find that a plan with a smaller monthly payment up front that increases over time as your salary likely increases – known as a phased repayment – is better suited.
You can take the opportunity to choose the best repayment plan for yourself by spending time with the US Department of Education online service. Loan simulator repayment calculator, which allows you to estimate your monthly payments on each plan.
Learn how to avoid faults
Exit counseling is also a good time to learn about your options as a federal student loan borrower if you ever experience financial difficulties that are affecting your ability to repay your student loans. It is important to know the tools in your toolbox now so that you can be proactive and resolve issues as they arise.
Fortunately, the federal student loans program offers many options for borrowers in difficulty, from suspending payments to reducing the amount of monthly payments based on your income. Knowing these tools and using them as needed can help you avoid getting into delinquency then default, which can damage your credit score and affect your future borrowing capacity.
Get financial planning advice
Student loan exit tips can also help you with your personal finances, as it covers financial planning and goal setting. It includes tools to help you think income taxes and how to access tax incentives for paying off student loans, as well as prompts related to building credit and boosting your credit score.
By following these tips, you can get off to a good start in paying off your student loans and set yourself on the path to a healthy financial future.