ED Clarifies Permissible Enhancements To Loan Entrance Counseling In DCL Q&A

Karen McCarthy, Policy & Federal Relations staff

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

Gail S | 4/13/2015 3:23:53 PM

I agree; why can't students do the loan counseling each time they borrow a student loan? We've seen so many students not remember the terms and conditions of the loan as early as 6 months after they received the loan. When they graduate 4-5 years later, they have no idea what they've borrowed and the total amount they've borrowed.

Congress is doing a great disservice to the student who will have no idea that her monthly loan payments will equal paying for a Lexus sedan. Congress does the institution a disservice by increasing the cohort default rate. Many students are ill-prepared to make their monthly payments, won't make any payments and will be added to the institution's cohort default rate.

Maria C | 4/9/2015 6:45:35 PM

I believe it is a disservice to our student population to not require entrance counseling on a yearly basis. Changes to financial aid programs are ongoing. Some of our students completed entrance counseling prior to SULA, LEU, etc. It is unfortunate that schools continue to be held responsible for default rates, but are not given the flexibility or authority to remedy the problem.

Mary M | 4/9/2015 3:39:19 PM

Entrance Counseling at studentloans.gov takes about 15-30 minutes to complete. Why is it considered a crime to ask students to complete it each new award year, or at least when they transfer to a new school? Politicians and the media keep crying that our student borrowers are not being prepared for the consequences of student loan debt, and then the feds tie our hands when we try to do something about it.

David S | 4/9/2015 9:49:52 AM

In other words, financial aid professionals can do everything except exercise our expertise to solve the problem. Unless Congress fixes this, it's going to stay broken. And that doesn't exactly fill me with optimism.

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