Enhancements to entrance loan counseling, such as budget worksheets, earnings calculations, and additional loan workshops and presentations, are permissible but may not be administered “in a manner that unreasonably impedes a student’s ability to borrow,” according to Dear Colleague Letter (DCL) GEN-15-06.
The DCL also states that once a borrower has completed the required entrance counseling, either at the borrower’s current institution or at a previous institution, the borrower cannot be required to participate in any subsequent counseling as a condition of receiving a Direct Loan. The institution may encourage and strongly recommend participation in any additional counseling it may offer outside of the context of entrance counseling, but it may not require it.
Current statute views student loans as entitlement programs; thus, institutions cannot establish additional eligibility criteria, including extra loan counseling. If a borrower is otherwise eligible for a loan, the institution cannot deny or limit the loan except on a case-by-case basis under professional judgment. Since there are so few practical ways for schools to prevent students from overborrowing, NASFAA supports changing the statute to allow institutions to set lower loan limits for certain broad categories of students.
The DCL presents various scenarios in a Q&A format. If you have additional loan counseling questions that are not addressed in the DCL, please leave them in the comments below.
Publication Date: 4/9/2015