Understanding student loans can be an intimidating task, especially when trying to understand it by yourself. Today I am going to talk about a couple resources to help you as you go through both initially receiving student loans as well as tools to help you pay them off.
What is federal student loan entrance and exit counseling?
Entrance counseling is a tool provided by Federal Student Aid (FSA) for students in order to ensure they understand what exactly they are getting into when they receive a student loan. Federal student loan entrance counseling is required for undergraduate, graduate, and professional students who have not previously received a Direct Subsidized Loan or a Direct Unsubsidized Loan. It is an online process on StudentAid.gov that provides students with knowledge about their loans including terms and conditions, student rights, and responsibilities associated with taking out federal student loans. Through this process students learn what a loan is, how interest works within the loan, repayment options, and how to avoid misconduct and default.
Not only is it important for students to understand their student loan upon receiving, but it is also important that students have a plan for repayment. Exit counseling is required for students that either decide to leave school, graduating, or are below half-time enrollment. Exit counseling is similar to entrance counseling in a sense it also an online process to ensure student understand obligations and prepared for repayment. As students have already received federal student loans and are preparing to start their careers after college, exit counseling focuses on helping students paint a picture of what your federal student loan payments will look like after school.
Last month Federal Student Aid (FSA) announced new changes to both entrance and exit counseling in order to adapt the service to online tools including their mobile app for mobile access as well as an optimized web experience. National Association of Student Financial Aid Administrator (NASFAA) staff reporter Owen Daugherty writes “The updates to the entrance counseling bring shorter pages and briefer learning modules optimized for the web, in addition to newly incorporated loan repayment simulations that show borrowers the various repayment options. The College Scorecard will also be integrated into the session to allow for program-level data to be viewed by borrowers so they can estimate their debt and salary after they graduate.” Exit counseling has also received new additions to add a more personalized and in detail report of payment strategies. They have added a simulation tool that shows students a forecast of the process and resulting outcome for various different repayment strategies. Furthermore, the new addition also recommends the optimal repayment strategy for borrowers on the premise of employment, marital, and tax filing status. Finally, FSA has also made updates to their mobile app introducing a status center, a page for user’s personal documents, and a contact page.
How can additional in-person counseling with PF improve the borrowing process?
Even with improved access to information with online tools, students can still be confused on some aspects of their student loans and need more information. In-person counseling can be that solutions for students. Borrowers will still be required to complete the online entrance and exit counseling through StudentAid.gov, but Powercat Financial can help you navigate the often times confusing borrowing process by walking through with your different options and answering any questions you may have along the way. At the beginning of the borrowing process in-person counseling can not only explain what your student loans mean, but more importantly work with you to figure out the type and amount of student loans that makes the most sense for each individual student. The biggest mistake students tend to make when taking out loans is taking out too much or too little. Taking out the wrong amount can cause students to either pay more in interest if too much money is taken out or can force the student to take out additional loans if not enough money was taken out in the first place.
In-person counseling can offer services that online tools cannot provide with exit counseling as well. With new additions to exit counseling students can view their payments based on the simulation tool, but often lack the knowledge to properly select the option that best fits their needs. At Powercat Financial, we can walk you through this process step by step explaining the different aspects of the repayment process and explain what all of these differences mean while considering what options make the most sense for your individual situation.
If you have any additional questions or would like more information regarding student loans, Powercat Financial would love to help! To request a free appointment, go to the request an appointment link on our website at www.k-state.edu/powercatfinancial. Your session may be conveniently held via Zoom.
Alex Miller
Peer Financial Counselor I
Powercat Financial
www.k-state.edu/powercatfinancial
Sources:
Daugherty, Owen. “FSA Announces Updates to Mobile App, New Features for Entrance and Exit Counseling.” NASFAA, 24 Feb. 2021, www.nasfaa.org/news-item/24816/FSA_Announces_Updates_to_Mobile_App_New_Features_for_Entrance_and_Exit_Counseling.
