What is Student Loan Entrance Counseling?
Student loan entrance counseling is a government required program that all student loan applicants must go through. The counseling itself is so that the borrower understands how the loans work, how to chose a loan, how to budget for loans, and how the loan will affect their lives after graduation. The program itself is very comprehensive and contains a lot of important information that the student needs in order to make the right decisions with regard to getting student loans.
The counseling begins with helping the student understand how a loan works. It covers interest rates, payments, and loan terms. It also covers the implications of not making payments and how making additional payments will help payoff the loan faster than making minimum payments.
The counseling also covers way to calculate the appropriate amount of money that a person should consider borrowing. This is important because student loan debt can be a burden to a person after they finish their education and begin working. The borrowing amount section shows the student how to calculate all of their expenses and ways to offset and minimize overall borrowing.
Entrance counseling then covers many of the types of student loans that are available. This is important because different educational paths require different loans and different careers offer different potential employer credits and payoffs of student loan debt. It is also important so the student understands their expected payment structure, underlying interest rates, loan terms, and flexibility with deferments should one or more be required.
The counseling also covers the unique paperwork involved in a student loan transaction. One of the most important parts is the student loan specific promissory note. This is unlike any promissory note you will sign in the future for other loans like for cars or mortgages, the student loan promissory note is signed one time and allows the lender to loan to you more than one time. While this is convenient, critics oftentimes claim that this ease of additional borrowing, without having to complete additional paperwork, can lure the student into borrowing more than they need and cause potential financial hardships in the future. All of these implications, concerns, and facts are covered in Student Loan Entrance Counseling.
At the end of your education, most student lenders also want you to attend a Student Loan Exit Counseling class. But the fact is that many students never attend because their education is already over. But the fact is that attending these types of classes is important and can help you avoid future headaches. All of the exit counseling program material is covered in this post education part of the entrance counseling program. The material covered within this section relates to making payments, refinancing, consolidating, deferments, and default. The student is also given extensive resources to which they can look to in order to payoff their loans quicker, attain loan forgiveness, or even obtain loan credits from their employers. The reason for these educational programs is to ensure the student is fully equipped to handle their loan in the most effective and responsible manner possible.
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