Schools must perform entrance counseling before disbursing Direct Loans to first-time student loan borrowers. Counseling sessions can be conducted in a number of ways such as in-person, via an audiovisual presentation, or through online interactive sessions. Regardless of the method, the following information must be provided:

• the terms and conditions of the loan
• an example of monthly payments
• available repayment plans
• deferment and forbearance options
• loan forgiveness and cancellation provisions
• the ability to accelerate repayment without a prepayment penalty
• the pros and cons of consolidation, such as the impact on minimum monthly payments, loan terms and loan benefits (e.g., the loss of the grace period and forgiveness options)
• the consequences of default, including ruined credit, litigation, referral to collection agency, wage garnishment, offset of income tax refunds, the deduction of collection charges of up to 25% from payments, nonrenewal of professional licenses, and the loss of deferment and forbearance options
• availability of tax benefits, such as the student loan interest deduction

For more information about Direct Loan entrance counseling regulations, go to 34 CFR 685.304(a). The Perkins entrance counseling regulations are located at 34 CFR 674.16(a).