PublicationTitle: Entrance Counseling Guide for Counselors
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What Is Required ................................... 2
Administrative Considerations ...................... 5
Your Presentation ..................................10
Presentation Outline: ""R"eviewing
the Borrowers Guide"..............................11
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.
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.
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 borrowers particular
program of study; and
- inform student borrowers of the average anticipated monthly
payments for your schools students on the basis of the average
indebtedness figures described above.
The U. S. Secretary of Education also recommends that your schools 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;
- 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
- reviewing loan provisions for deferment, forbearance, and
- reviewing the available repayment plans;
- informing borrowers there is no penalty for early repayment if
- 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.
*There are two exceptions to this requirement under certain circumstances: if the borrowers school has closed or if the school
has falsely certified the borrowers eligibility.
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
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 schools financial aid office.
Help is also available from the U. S. Department of Education. Borrowers may call the Departments Direct Loan Servicing Center anytime they have questions about their Direct Loans. The U.S. Department of Education has several Direct Loan Servicing Center locations (with separate addresses and toll-free telephone numbers). The address and telephone number of the Servicing Center that services your students loans will appear on all correspondence that the students receive from the Servicing Center. Students should always use that information if they have questions about their student loans. If students misplace that information, they can call 1-888-447-4460 to be routed to the location that services their loans.
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.
Organizing Counseling Sessions
The content of your entrance counseling sessions should be based partly on your schools 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 schools 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
in 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.
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 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 Educations Direct Loan Servicing Center. There are several Direct Loan Servicing Center locations (with separate addresses and telephone numbers). Even so, borrowers will always have only one Servicing Center to deal with, even if they take out several Direct Loans or transfer from one school to another. After a borrowers loan is booked, the borrower will be notified of the location that services his/her loan account (the telephone number and address will appear on all correspondence and on all statements the student receives from the Servicing Center). 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.
The materials you may want to distribute to your students during entrance counseling sessions include:
- the Entrance Counseling Guide for Borrowers for the Direct
- the Direct Loan promissory note and disclosure statement;
- the Direct Loan Borrowers Rights and Responsibilities (note that
a hand-in summary checklist of this statement is included in the
- your schools satisfactory academic progress policy;
- your schools refund and repayment policies;
- your schools schedule of disbursement dates. You may also want to
stamp your schools 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 borrowers Rights and Responsibilities Summary Checklist that students can sign and return to you. Its completion meets the governments 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.
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 schools 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.
Recommended 4-Step Entrance Counseling Presentation
1. Introduce the Session. Give students an overview of what youll
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 approach to entrance counseling.
"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
- 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.
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
- 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
- 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.
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).
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 Educations 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 lenders 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.
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
- 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.
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 Educations 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 Borrowers 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, heres information about:
- how to make an appointment to see a financial aid expert here:
- community service agencies that can help with budgeting and
- other school resources, such as tutoring or child care:
Are there any final questions?