Loan Counseling

The Higher Education Act of 1965 requires colleges to provide loan borrowers of federal student loans with loan counseling. Entrance counseling occurs before loans will be disbursed and will explain the use of the Master Promissory Note (MPN) and the impact of deferring interest (interest capitalization) on the loan balance and cost of the loan.  Exit counseling occurs shortly before the student graduates or drops below half-time enrollment, while requiring students updated permanent address, the name and address of their employer and the address of their next of kin.  The loan counseling is focused on helping students understand their rights and responsibilities and obligation to repay the debt.  

The loan counseling will review a lot of information:

• the terms and conditions of the loan
• an example or actual monthly payments
• available repayment plans
• deferment and forbearance options
• loan forgiveness and cancellation provisions
• the ability to accelerate repayment without a prepayment penalty
• the pros and cons of consolidation
• the consequences of default
• availability of tax benefits

The loan counseling sessions will emphasize that the borrower is obligated to repay the full amount of the loan even if the borrower does not graduate, is unable to get a job after graduation or is dissatisfied with the quality of the educational program or other services.