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If you’re feeling overwhelmed by your student loan situation, a student loan counselor may be able to help. Student loan counselors can provide assistance and advice as you navigate the maze of student loan repayment.
However, a student loan counselor can’t tell you anything you can’t find out on your own for free. Student loan counseling tends to be best for borrowers who want personalized support from an expert as they come up with a plan for managing their student debt.
What is student loan counseling?
Student loan counseling is typically provided by nonprofit agencies or private companies for a fee. It involves meeting with a counselor one-on-one to discuss how to manage your student loans.
Your student loan counselor will review your financial situation and explain your options for repayment. They can help you devise a strategy for tackling your debt, such as applying for income-driven repayment or pursuing student loan forgiveness.
Some organizations offer multiple tiers of service. The baseline tier might involve coming up with a plan for your student loans, while the higher tier could provide hands-on support as you fill out forms, call your loan servicer, or take other steps to execute that plan.
How does it help?
Student loan counseling can help you tackle your student loan challenges in a number of ways. Some potential benefits include:
- Determining the status of your loans. Your student loan counselor can tell you where to find the details of your loans so you can review your current balances, interest rates, monthly payments, and other important details.
- Exploring various repayment plans. During student loan counseling, you may also go over your options for repayment, such as income-driven repayment and extended repayment.
- Coming up with your individual plan of action. Your student loan counselor may review your income and expenses to help you come up with a plan for managing your student loan debt.
- Tracking your progress. Your counselor can help you keep tabs on your progress and ensure you’re staying on track toward your student loan goals.
How much does student loan counseling cost?
The cost of student loan counseling will vary by organization and service tier.
- GreenPath, a nonprofit organization, offers a free initial consultation with a student loan counselor, during which you can develop a plan to pay your bills. For its more in-depth enhanced support plan, the fee is $200.
- Money Management International, another nonprofit, typically charges a $99 fee for a full analysis of your financial situation and a detailed action plan.
The rates for student loan counseling from private companies tend to be higher than the rates at nonprofit organizations.
- Student Loan Planner charges new clients $595 to book a consultation (existing clients pay $495).
Research the fees before signing up for student loan counseling so you know exactly what to expect.
Federal student loan entrance counseling
Although the terms are easy to mix up, student loan counseling is not the same as federal student loan entrance counseling. Federal student loan entrance counseling is an online process you must complete before borrowing a federal Direct Subsidized or Unsubsidized Loan or Grad PLUS Loan for the first time.
You can go through entrance counseling on the Federal Student Aid website in about 30 minutes, and it must be completed in a single session. Entrance counseling will teach you about the terms and conditions of your loan, including how repayment works and how to avoid default.
Your school can’t disburse your loan until you finish entrance counseling. Some schools also have additional student loan entrance counseling requirements, so check with yours to see if you have to take any additional steps.
Pros and cons of student loan counseling
Student loan counseling has both pros and cons, all of which are worth considering before you sign up. Here are some potential benefits:
- Get personalized support. Student loan counseling gives you direct, one-on-one support from an expert who will review your financial situation and give you advice on how to move forward.
- Gain an understanding of your repayment options. Your student loan counselor will go over multiple repayment options and strategies, such as income-driven repayment or refinancing your loans for better rates.
- Come up with a plan of action. During student loan counseling, you’ll come up with a specific, step-by-step plan for managing your student loans and meeting your financial goals.
There are also some downsides to student loan counseling:
- Costs a fee. Student loan counseling generally isn’t free, and a single session could cost $50 or more. The fees can get especially hefty at private companies.
- Doesn’t offer information you can’t find yourself. Your student loan counselor doesn’t have any secret knowledge. You can research student loan repayment plans and other strategies on your own from trusted resources, such as the Federal Student Aid website. Plus, you can apply for income-driven repayment, loan consolidation, forgiveness programs, or refinancing on your own for free.
- May be tough to weed out the scams. There are a number of student loan scammers out there looking to take advantage of overwhelmed borrowers. Make sure your student loan counseling provider is legitimate before paying any fees or handing over any sensitive information. If the organization is making promises that sound too good to be true, you may have encountered a scammer. Promises of overnight loan cancellation or high-pressure sales tactics, for instance, are both red flags that could indicate a scam.
Related: Learn more about refinancing your student loans on Credible.com
How to determine if a student loan counselor is right for you
While student loan counseling can be helpful in some cases, it isn’t right for everyone. Here are a few situations where credit counseling might be a good idea:
- You’re overwhelmed by your student loan debt. If you have a high amount of student loan debt, it can be hard to know how to handle it. A student loan counselor can help you clearly understand the state of your student loans as well as how to manage and repay them.
- You’re unsure which repayment strategy is right for you. Federal student loan borrowers have access to several different repayment plans. With a student loan counselor, you can choose the option that best suits your financial situation.
- You want to save time on researching repayment options. While there are plenty of free resources for student loan repayment strategies available online, it can be time-consuming to sort through them as well as to decide which option is right for you. A student loan counselor can break this information down in easy-to-understand terms and can save you time on sifting through all of it on your own.
How do I get started?
If you’re looking for student loan counseling, check out nonprofit organizations that are either,
- Affiliated with a reputable association, such as the National Foundation for Credit Counseling, or
- Accredited by a legitimate organization, like the Council on Accreditation
If you opt for a private company, ask about the counselor’s qualifications before signing up. It’s also useful to read reviews on a site like TrustPilot to see what other borrowers have to say.
Kathryn Pomroy has contributed to the reporting of this article