December 4, 2008

Do You Know the Answer?

Q. Did the Higher Education Opportunity Act (HEOA) change entrance and exit counseling requirements?

A. Yes, the HEOA did change the requirements for both entrance and exit counseling. Entrance counseling has been added to the statute and new requirements have been added to existing regulations. The HEOA also revised the sample repayment information to be provided to students. Additionally, the HEOA established a single exit counseling standard for both Stafford and Grad PLUS borrowers and added several new exit counseling requirements.

A summary of changes enacted by the HEOA is provided below.  

Entrance Counseling

Each institution is required to provide certain information to first-time borrowers at or prior to first disbursement. This information may be given during an in-person counseling session, on a separate written form that is signed by the borrower and returned, or online with borrower acknowledgement of receipt. Required elements include:

• Comprehensive, easy-to-read information about the terms and conditions of the loan.
• New information:
  • Explanation of how interest accrues and how it is capitalized if not paid.
  • Option to pay interest rather than allowing it to capitalize.
  • Effect of accepting the loan on borrower eligibility for other forms of financial aid.
  • School's definition of half-time enrollment during regular and summer terms.
  • Consequences of dropping below half-time enrollment.
  • Importance of contacting appropriate school offices if borrower elects to withdraw.
  • Obligation to repay full loan amount even if borrower doesn’t complete program within expected completion time.
  • Likely consequences of default, including debt collection procedures.
  • Information about NSLDS and how borrowers can access loan records.
  • Name and contact information for person to contact with questions about rights and responsibilities or loan terms and conditions.
  • Revised sample repayment information based upon:
    • The levels of indebtedness of subsidized or unsubsidized Stafford loan borrowers and as appropriate, unsubsidized Stafford loan or Grad PLUS loan borrowers; or
    • The average cumulative indebtedness of other borrowers in the same program as the borrower, at the same school.

Exit Counseling

Each institution is required to provide new information, including:

• Available repayment plans and a description of plan features, including sample monthly payments and differences in interest paid and total payments for each plan.
• General description of loan forgiveness programs.
• Copy of ED provided information- 485(d).
• Explanation that borrowers may prepay loans, pay each loan on a shorter schedule and change repayment plans.
• Deferment and forbearance options.
• Impact of loan consolidation.
• General description of potential tax benefits.
• Information about NSLDS and how borrowers can access loan data.
• Information about federal delinquent debt collection practices.
• Interactive counseling, with tests encouraged.

For more information about entrance and exit counseling requirements, contact our Policy, Compliance and Training (PCT) department at 405.234.4432 or pct@ogslp.org.