As schools prepare for loan counseling changes mandated by recently revised federal regulations, USA Funds® offers the following reminder about counseling requirements for students with Grad PLUS loans.

Entrance Counseling

Schools must implement entrance counseling for Grad PLUS students no later than July 1, 2008. The U.S. Department of Education specified the following entrance counseling rules in final regulations:

• The school must ensure that counseling is conducted with each graduate or professional student who is obtaining a PLUS loan, unless the student previously has received a Federal PLUS or Direct PLUS loan.
• The student must complete entrance counseling prior to the delivery of the loan’s first disbursement.
• Counseling must inform the Grad PLUS borrower of sample monthly payment amounts based on a range of student indebtedness of graduate and/or professional students at the school or in that program of study, or of student-borrowers with both Stafford and PLUS loans — depending on the types of loans the borrower has obtained at the same school or in the same program of study at that school.
• For a graduate or professional student who has not received Stafford loans previously, counseling also must include key elements of the Stafford entrance counseling requirements, including the following:
• Explaining the use of the Master Promissory Note.
• Emphasizing the importance of repaying the loan.
• Describing the consequences of default, including adverse credit reports, federaltax offset and litigation.
• Emphasizing the fact that the student is obligated to repay the loan even if the student does not complete the program of study, is unable to obtain employment,or is otherwise dissatisfied with the educational services the school provides.

Exit Counseling

The Higher Education Act of 1965, as amended, does not provide the authority to require exit counseling for parent or student PLUS loan borrowers. Amended exit counseling requirements, however, include a new mandate regarding Stafford loan borrowers who also have Grad PLUS loans.

For those students, effective July 1, 2008, schools must provide information regarding the average monthly payment amount based on their average debt or the average indebtedness of borrowers with both Stafford and Grad PLUS loans at the school.

Resources for more information

More details about requirements for entrance and exit counseling for Grad PLUS loan borrowers are available from resources such as subsections 4.4.C and 4.4.D of the Integrated Common Manual, and integrated regulations 34 CFR 682.604 paragraphs (f) and (g). These resources are available in the “Loan Policy and Regulations” section of the USA Funds Web site.

Additionally, USA Funds’ policy experts, available by e-mail, are available to answer your questions about loan counseling requirements.