Federal Student Aid - IFAP
   
PublicationDate: June
PublicationTitle: Entrance Counseling Guide for Counselors
PublicationYear: 1996

entcc96.pdf  PDF
Contents
What Is Required-2
Administrative Considerations-5
Your Presentation-10
Presentation Outline: "Reviewing the Borrowers'
Guide"-11

Introduction

This Entrance Counseling Guide for Counselors
(Counselors' Guide) is designed to help school
financial aid administrators present effective
entrance counseling sessions for first-time
borrowers of subsidized Federal Direct
Stafford/Ford Loans (Direct Subsidized Loans) and
Federal Direct Unsubsidized Stafford/Ford Loans
(Direct Unsubsidized Loans). Both loans are part of
the William D. Ford Federal Direct Loan Program
(Direct Loan Program).

This Counselors' Guide, the companion video, and
the Entrance Counseling Guide for Borrowers
(Borrowers' Guide), along with the exit counseling
materials, constitute the Counseling Kit, William D.
Ford Federal Direct Loan Program. These materials
highlight key student loan information and financial
management concepts. Suggestions for using the
video and coordinating the information in it with the
Borrowers' Guide are provided later in this guide.
Financial aid administrators can use these materials
to organize their presentations, to focus on the
issues most important to their students, and to cover
the information necessary to comply with U.S.
Department of Education (ED) regulations
governing initial loan counseling in 34 CFR
685.304(a).

ED is providing these materials as optional
counseling tools. Schools are not required to use
them.

The William D. Ford Federal Direct Loan Program
is authorized by Title IV, Part D, of the Higher
Education Act of 1965, as amended.

1

What Is Required

A school participating in the Direct Loan Program
is required by law to provide entrance counseling to
first-time borrowers.

A FIRST-TIME BORROWER is someone who has not
previously received a Direct Subsidized Loan,
Direct Unsubsidized Loan, Federal (non-Direct)
Stafford Loan, Federal (non-Direct) Unsubsidized
Stafford Loan, or Federal Supplemental Loan for
Students (SLS). Students who have received one or
more of these loans are not considered first-time
borrowers.

Federal regulations allow schools to conduct
entrance counseling in person, by using a video with
a financial aid expert available to answer questions,
by using computer assisted technology, or by
mailing counseling materials to students if the
school has adopted an alternative counseling
approach (see page 4).

Written counseling materials must also be mailed to
borrowers enrolled in correspondence programs or
study-abroad programs approved for credit at the
home school prior to disbursing the loan. The
Borrowers' Guide can be used to satisfy this
requirement. These students do not have to receive
in-person counseling as well.

Schools must also maintain documentation showing
that each borrower received the required counseling.

2

Regulatory Requirements

Federal regulations require that, as part of entrance
counseling, your school must--

- emphasize to student borrowers the seriousness
and importance of the loan repayment obligations
they are assuming;

- describe in "forceful terms" the likely
consequences of default, including damaged credit
ratings, legal action taken against borrowers, and
garnishment of borrowers' wages;

- provide borrowers with the average indebtedness
of students who have obtained Direct Subsidized
and Direct Unsubsidized Loans to attend your
school or to enroll in the borrower's particular
program of study; and

- inform student borrowers of the average
anticipated monthly payments for your school's
students on the basis of the average indebtedness
figures described above.

Secretary's Recommendations

The U. S. Secretary of Education also recommends
that your school's entrance counseling include other
topics covered in Appendix D of 34 CFR 668, the
Student Assistance General Provisions, such as--

- reminding borrowers to keep the Direct Loan
Servicing Center (Servicing Center) informed of
any changes in name, address, telephone number,
Social Security Number, employer, or enrollment
status that might occur during the lives of their
loans;

- reminding borrowers they are obligated to repay
the full amounts of their loans, plus interest, even if

-- they do not complete their programs of study;*

-- they do not like their schools or programs of
study; or

-- they do not obtain employment after completing
their programs of study;

*There are two exceptions to this requirement under
certain circumstances: if the borrower's school has
closed or if the school has falsely certified the
borrower's eligibility.

3

- reviewing critical information by having students
answer questions (such as the ones provided on
page 18 of the Borrowers' Guide);

-counseling borrowers on budgeting and other
aspects of personal financial planning;

-reviewing loan provisions for deferment,
forbearance, and discharge (cancellation);

-reviewing the available repayment plans;

-informing borrowers there is no penalty for early
repayment of their loans;

-reviewing borrowers' rights and responsibilities;

-reviewing all loan terms and conditions, including
interest rates and loan fees; and

-reminding borrowers to contact the Direct Loan
Servicing Center if they have questions or any
difficulty making a payment.

Alternative Approach to Entrance Counseling

A school may adopt an alternative approach to
entrance counseling as part of its overall quality
assurance plan, as detailed in 34 CFR
685.304(a)(5). If your school chooses to use the
alternative approach, it must--

-ensure that each first-time borrower is provided
with written counseling materials containing the
information described in 34 CFR 685.304(a)(3);

-target those students who are most likely to default
and provide them with more intensive counseling
and support services; and

-include outcome-oriented performance measures
to demonstrate the effectiveness of the alternative
counseling approach, such as measures that
determine levels of borrowing, default rates, and
withdrawal rates.

4

Administrative Considerations

A school is required to provide entrance counseling
for first-time student loan borrowers before making
the first disbursement of a Direct Subsidized Loan
or a Direct Unsubsidized Loan.

The total number of first-time borrowers at your
school will determine the number of counseling
sessions you offer, the timing, and the size of the
rooms to use.

Your first-time student loan borrowers are likely to
find the quantity and complexity of loan
information overwhelming. Be sure to let them
know that, in addition to the entrance counseling
session, help is always available from your school's
financial aid office.

Help is also available from the U. S. Department of
Education. Borrowers may call the Department's
Direct Loan Servicing Center anytime they have
questions about their Direct Loans. The toll-free
number is 1-800-848-0979.

While schools are required only to provide entrance
counseling for first-time borrowers, ED encourages
you to distribute the Borrowers' Guide to all Direct
Loan borrowers.

5

Organizing Counseling Sessions

The content of your entrance counseling sessions
should be based partly on your school's student
demographics and available resources. For example,
the number of Direct Loan recipients at your school
will be a factor in deciding whether individual or
group counseling is more appropriate. Your school's
graduation rate and research on why and when
students drop out of your school might affect how
much emphasis you place on certain issues such as
in-school budgeting.

Scheduling Counseling Sessions

The following factors will help you determine the
schedule for your loan counseling sessions:

-Consider when most of your Direct Loans are
processed and select a loan counseling date (or
dates) that is soon after loan processing is
completed. Creating an annual entrance counseling
schedule might be helpful.

-Entrance interviews should be convenient for
students. If yours is a residential campus, you might
want to conduct entrance counseling in dormitories
in the evenings. If your school has a number of
commuting students, you might offer counseling
sessions on weekends or evenings.

-Seating limitations and group size will also affect
scheduling. For optimum participation from
students, group sessions should have no more than
30 attendees. Sessions larger than this might
discourage questions or make it difficult for you to
answer all student questions adequately. If groups
are too large, it is difficult to evaluate the
effectiveness of counseling sessions.

Notifying Borrowers

Borrowers need to be notified of the date, place, and
time of their entrance counseling sessions. Your
notification should emphasize that the federal
government mandates that first-time borrowers
receive counseling before their loans can be
disbursed.

You might want to include your entrance counseling
notifications with students' award letters. You might
also consider a news release in the student
newspaper, a notice on the bulletin boards in the
student union and residence halls, and/or a message
to students on your campus financial

6

aid home page. Plan to get your notices out in
advance of the sessions to allow sufficient time for
students to mark their calendars and inform you if
they have special needs.

Understanding the Direct Loan Program

Your students need to understand loans in general
and the specifics of the Direct Loan Program in
particular.

A unique feature of the Direct Loan Program is the
U. S. Department of Education's Direct Loan
Servicing Center. The Servicing Center manages
and oversees students' Direct Loans from first
disbursements until they are repaid in full.

Borrowers are directly responsible for repaying their
loans and must keep in contact with the Servicing
Center during the period of loan repayment.

If students at your school previously borrowed from
other federal non-Direct loan programs, it is also
important that they understand the differences
between those federal loans and Direct Loans. For
example, although many of the terms of the loans
are similar, the lender, delivery system, and
repayment options differ significantly.

You need to remind borrowers that it is essential
they inform you of any other federal student loans
they have received or are applying for to make sure
that they maintain good standing with their
non-Direct federal loans.

Necessary Equipment and Facilities

The entrance counseling video is easy to show to
student borrowers. The only requirements are a
television (or monitor) and a VHS-compatible
VCR.

You also need to be confident that your video
presentation and facility are accessible to all
students or that arrangements are made to
accommodate any borrowers with special needs.
The video is closed-captioned for hearing-impaired
students. You might need to make preparations for
students with special needs, such as students who
use wheelchairs or those who are blind or
visually-impaired.

7

Accompanying Materials

The materials you may want to distribute to your
students during entrance counseling sessions
include:

-the Entrance Counseling Guide for Borrowers for
the Direct Loan Program;

-the Direct Loan promissory note and disclosure
statement;

-the Direct Loan Borrower's Rights and
Responsibilities (note that a hand-in summary
checklist of this statement is included in the
Borrowers' Guide);

-your school's satisfactory academic progress
policy;

-your school's refund and repayment policies;

-your school's schedule of disbursement dates;

-the Servicing Center's telephone number and
address.

The toll-free telephone number is 1-800-848-0979.

The address for borrowers to send their payments to
is:

Direct Loan Payment Center
P.O. Box 78451
Phoenix, AZ 85062-8451

You may also want to stamp your school's name,
address, and telephone number in the "For School
Use" box on the back cover of the Borrowers'
Guide.

Documenting Student Attendance

Federal law requires that first-time borrowers
receive entrance counseling before receiving any
Direct Loan money. Federal law also requires
schools to document that first-time borrowers
received the counseling. On page 21 of the
Borrowers' Guide is a borrower's Rights and
Responsibilities Summary Checklist that students
can sign and return to you. Its completion meets the
government's documentation requirements. The
page is perforated for easy removal.

Unless your school has developed an alternative
approach to entrance counseling in accordance with
federal regulations (see page 4), your school must
conduct the required entrance counseling with each
first-time Direct Subsidized Loan and Direct
Unsubsidized Loan borrower in person, by video or
by computer assisted technology. Remember, if a
video is used, your school must also have a
financial aid expert on hand to answer student
questions.

Written counseling materials must also be mailed to
borrowers enrolled in correspondence programs or
study-abroad programs approved for credit at the
home school prior to disbursing the loan. The
Borrowers' Guide can be used to satisfy this
requirement; these students do not have to receive
in-person counseling as well.

8

Entrance Counseling Tips

The entrance counseling materials in the Counseling
Kit (video, Counselors' Guide, and Borrowers'
Guide) provide important information about the
Direct Loan Program and, with one exception, meet
all federal entrance counseling requirements. The
exception: Your school must add its own
information about average indebtedness and average
monthly payment amounts of its Direct Loan
borrowers, as discussed on page 3 of this
Counselors' Guide. You may use the "For School
Use" box on the back of the Borrowers' Guide or the
"Important Things You Should Find Out" section of
the Borrowers' Guide to provide this required
information.

The video and Borrowers' Guide are designed to
teach students how to manage their loans
successfully. Encourage them to file the Borrowers'
Guide and keep it with their important papers.
Although students might not remember all the
information detailed during entrance counseling,
when they have questions, they are likely to
remember that the Borrowers' Guide contains the
answers.

When using the video, your school's financial aid
expert should be prepared to answer questions,
review portions of the Borrowers' Guide, and
reinforce points made in the video. Topics discussed
might include calculating a realistic budget using
actual expenses and resources, borrowing only what
is needed, and defining terms such as grace period,
deferment, forbearance, and repayment.

You might want to make a record of commonly
asked questions during entrance counseling sessions
and create your own question-and-answer sheet to
use as a handout in later sessions or in your loan
information packets.

9

Your Presentation

Recommended 4-Step Entrance Counseling
Presentation

1. Introduce the Session. Give students an overview
of what you'll be discussing during the session.

2. Show the Video. The video covers most of the
information that new student borrowers need to
know.

3. Review the Borrowers' Guide. Before answering
questions, you may want to go over the Borrowers'
Guide with students to make additional points and
emphasize important information. For your
convenience, the following pages provide an outline
for such a presentation. The outline closely follows
the Borrowers' Guide.

4. Answer Questions. Your school must provide a
financial aid expert to answer questions after the
video ends.

REMEMBER, IT IS A FEDERAL REQUIREMENT THAT YOU
DOCUMENT STUDENT ATTENDANCE AT ENTRANCE COUNSELING
SESSIONS, UNLESS YOU HAVE DEVELOPED AN ALTERNATIVE
APPROCH TO ENTRANCE COUNSELING.


10

Presentation Outline: "Reviewing the Borrowers'
Guide"


Note to Counselor: The following presentation
outline is written as a script, so that you can read
from it directly or use it as a guide for writing your
own presentation.


Facts About Your Direct Loans

Pages 1-3 of the Borrowers' Guide presents facts
about Direct Subsidized Loans, Direct Unsubsidized
Loans, and the role of the Direct Loan Servicing
Center.

--The interest rate on your Direct Loan is variable
and, by law, may be adjusted each year. However, it
will never go higher than 8.25 percent for students
and 9 percent for parents.

--There are limits on the amounts you can borrow
each year and overall limits on student-loan
borrowing during the years you are in school
(aggregate limits).

--Subsidized means the government will not charge
you interest during some periods--for example,
while you remain in school at least half-time. In
contrast, you are charged interest on unsubsidized
loans from the day the loan funds are disbursed until
you repay them in full.

--After unsubsidized loan funds are disbursed, you
will receive information each quarter about the
interest that is accumulating on your loan. You may
choose to pay this interest or wait and have it
capitalized when you enter repayment.

--Capitalizing interest means the unpaid
accumulated interest will be added to the total
amount you owe. This postpones your interest
payment, but doing so means you will pay more
over the life of your loan.

--By law, a loan fee equal to 4 percent of the loan
amount disbursed to you will be subtracted
proportionately from each disbursement of your
loan. In other words, the loan fee is another expense
of borrowing and reduces the total dollar amount
paid to you by 4 percent.

--The Direct Loan Servicing Center is responsible
for working with you as a Direct Loan borrower,
helping answer your questions, and collecting your
loan payments.

11

Presentation Outline:(continued)
"Reviewing the Borrowers' Guide"

Direct Loan Repayment Plans

Pages 4-6 of the Borrowers' Guide introduces the
four repayment plans for the Direct Loan Program.
The choices are intended to make it as easy as
possible for you to repay your loans.

More specific information will be given about these
repayment options when you attend exit counseling
just before leaving school.

Direct Consolidation Loans

In addition to the four repayment plans, a Direct
Consolidation Loan can provide the opportunity to
combine all of your federal student loans into one
loan. This includes Federal Perkins Loans and
Federal Family Education Loans (FFEL). This is
discussed on page 6 of the Borrowers' Guide.

Beginning Repayment and Related Provisions

Pages 8-10 of the Borrowers' Guide explains how,
as a Direct Loan borrower, you may be eligible to
postpone payments. For example, deferments and
forbearance, under certain circumstances, are
options that can provide flexibility during
repayment and help you to meet your repayment
obligations.

Pages 11-12 of the Borrowers' Guide describe the
consequences of failing to repay your Direct Loan.
The federal government expects all student loan
borrowers to fulfill their obligation to repay their
loans.

The federal government will use every means at its
disposal to collect repayment on your Direct Loan.
If you fail to repay a loan, the consequences are
serious:

--The entire unpaid balance and accrued interest on
your loan would be immediately due and payable.

--You will lose your deferment options.

--You will lose your eligibility for additional federal
student financial aid.

--Your debt will be reported to credit bureaus
resulting in a bad credit rating, which makes it
difficult for you to get any other type of loan, such
as a home mortgage or car loan.

--The federal government can take your tax refunds.

--Your total debt may be increased by late fees,
additional interest, court costs, collection fees,
attorney fees and other costs.

--Your employer, at the request of the federal
government, can withhold (garnish) part of your
wages.

--The federal government can take legal action
against you.

12

Presentation Outline:(continued)
"Reviewing the Borrowers' Guide"

Your Responsibilities While In School

Page 12 of the Borrowers' Guide explains that you
must notify the financial aid office any time you--
--reduce your enrollment status to less than
half-time;
--withdraw from school;
--stop attending classes;
--fail to reenroll for any term;
--change your expected graduation date; or
--change your name and/or address (local or
permanent).

Transfer Students

Page 12 of the Borrowers' Guide also discusses
what those of you who are transfer students must do
if you received federal Direct student loans while
attending other schools. If you transferred from
another school where you received federal Direct
student loans, and you will be enrolled at least
half-time, contact the U.S. Department of
Education's Direct Loan Servicing Center to request
an in-school deferment.

If you owe money on other federal student loans
such as a Federal Family Education Loan (formerly
Guaranteed Student Loan) or Federal Perkins Loan,
you must get in touch with the lender or the lender's
servicer, to inform the lender or servicer that you
have enrolled at this school and need to apply for an
in-school deferment for your non-Direct loans.

Budgeting

Pages 13-17 of the Borrowers' Guide advises you
that budgeting can help you stay in school and help
limit the total amount you need to borrow. The
Borrowers' Guide takes a step-by-step approach to
creating and maintaining a budget.

--Budgeting your resources helps you manage your
money and stay in school.

--In-school budgeting means--
-determining your cost of attendance (COA);
-defining your financial resources;
-seeking out other possible resources, such as
scholarships and part-time employment; and
-using a budget worksheet.

Note to Counselor: Review Option. On page 18 of
the Borrowers' Guide is a student review sheet. This
is a good point in your presentation to have students
review what they have learned.


13

Presentation Outline:(continued)
"Reviewing the Borrowers' Guide"

Important Information For Students To Keep

Page 19 of the Borrowers' Guide provides a
worksheet to help you keep track of how much you
have borrowed. Page 20 has space for you to write
down important information, including specific
information about this school.

The school-specific information you need to note
includes--
--refund and repayment policies;
--the satisfactory academic progress requirements;
--the procedure for reporting name and address
changes; and
--the toll-free telephone number and address for the
U.S. Department of Education's Direct Loan
Servicing Center.

Rights and Responsibilities Summary Checklist

Documenting your attendance at entrance
counseling is a federal requirement. Filling out and
turning in the Rights and Responsibilities Summary
Checklist on page 21 of the Borrowers' Guide
fulfills this requirement; the page is perforated for
easy removal. Please read the checklist carefully,
sign it, tear it out, and turn it in to me.

Note to Counselor: You might want to point out to
students that the Rights and Responsibilities
Summary Checklist is repeated on the inside back
cover of the Borrower's Guide so they will also have
a copy of it. You may also have students sign an
attendance roster as a way to record attendance.


Wrapping Up the Presentation

In closing, here's information about:

--how to make an appointment to see a financial aid
expert here:

--community service agencies that can help with
budgeting and financial planning:

--other school resources, such as tutoring or child
care:


Are there any final questions?




14

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