You	cannot	require,	but	you	can	encourage	borrowers	to	participate	in	counseling	beyond	entrance	counseling	to	be
better	informed	about	borrowing,	the	terms	of	their	Direct	Loans,	their	repayment	responsibilities	and	options,	and	the
consequences	of	default.	Your	school	can	also	offer	financial	literacy	classes,	on	a	credit	or	non-credit	basis,	that	include
information	on	budgeting,	debt	management,	anticipated	earnings	by	profession,	elements	of	loan	counseling,	etc.,
though	eligibility	for	a	Direct	Loan	cannot	be	contingent	on	completion	of	such	a	class.
Required	Entrance	Counseling	Content	for	Direct	Subsidized	Loan	and	Direct	Unsubsidized	Loan	Borrowers
Below	we	provide	a	summary	of	the	information	that	must	be	covered	in	entrance	counseling	for	Direct	Subsidized	Loan
and	Direct	Unsubsidized	Loan	borrowers.	For	more	detailed	information,	refer	to	the	regulations	cited	at	the	end	of	this
section.
Entrance	counseling	for	Direct	Subsidized	and	Unsubsidized	loan	borrowers	must:
Explain	the	use	of	a	Master	Promissory	Note	(MPN);
Emphasize	the	importance	of	the	loan	repayment	obligation;
Describe	the	likely	consequences	of	default,	including	adverse	credit	reports,	delinquent	debt	collection	procedures
under	Federal	law,	and	litigation;
Emphasize	that	the	borrower	must	repay	the	full	amount	of	the	loan	even	if	the	borrower	does	not	complete	the
program,	does	not	complete	the	program	within	the	regular	time	for	program	completion,	is	unable	to	obtain
employment	upon	completion,	or	is	otherwise	dissatisfied	with	or	does	not	receive	the	educational	or	other	services
that	the	student	paid	for	with	the	loan;
Inform	the	student	borrower	of	sample	monthly	repayment	amounts	based	on	a	range	of	student	levels	of
indebtedness	depending	on	the	types	of	loans	the	borrower	has	received,	or	based	on	the	average	indebtedness	of
other	borrowers	in	the	same	program	at	the	same	school;
Explain	how	accepting	the	loan	will	affect	the	borrower9s	eligibility	for	other	forms	of	student	financial	assistance;
Provide	information	on	how	interest	accrues	and	is	capitalized	during	periods	when	the	interest	is	not	paid	by	either
the	borrower	or	the	Department;
Inform	the	borrower	of	the	option	to	pay	the	interest	on	a	Direct	Unsubsidized	Loan	while	the	borrower	is	in	school;
Explain	the	definition	of	half-time	enrollment	at	the	school	and	the	consequences	of	not	maintaining	half-time
enrollment;
Explain	the	importance	of	contacting	the	appropriate	offices	at	the	school	if	the	borrower	withdraws	before
Direct	Loan	Entrance	Counseling
34	CFR	685.304(a)
Loan	Counseling	Requirements	and	Flexibilities
DCL	GEN-15-06
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