What You Need to Know About Student Loan Counseling

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If you’re struggling with student loan debt, student loan counseling might be a good option to consider. This type of advice can help you better understand your financial situation and develop a manageable plan for repaying your student loans.

Here’s what you need to know about student loan advice:

How does student loan counseling work?

Student loan counseling is a service offered by many nonprofit credit counseling agencies – sometimes in person, but more commonly over the phone.

Talking to a student loan counselor will usually involve a full assessment of your financial situation, including your student loan debt and repayment options. The advisor will then help you develop a repayment strategy for your loans adapted to your budget and your situation.

Benefits of counseling

Here are some of the potential benefits offered by student loan counseling:

  • Better understand your repayment options. A student loan counselor can explain each of the repayment options available to you. For example, if you have federal student loans, you can enroll in an income-contingent repayment (IDR) plan to have payments based on your income. Or you might be able to pursue a student loan forgiveness program.
  • Explore federal consolidation or private refinancing. Counseling can also provide advice on whether federal student loan consolidation or private student loan refinancing is right for your situation.
  • Create a comprehensive action plan. After reviewing your finances and discussing repayment options, a student loan counselor will help you come up with a comprehensive game plan to tackle your student loan debt.

Point: If you decide to refinance your student loans, be sure to consider as many lenders as possible to find the right loan for your situation.

Credible makes refinancing easy – you can see your prequalified rates from multiple approved refinance lenders in just two minutes.

Compare rates now

Learn more: Student Loan Refinance Calculator: Should I Refinance?

Disadvantages of counseling

And here are some of the possible downsides that could arise from student loan advice:

  • Does not offer information that you cannot find yourself. All of the information provided by student loan counselors is readily available online at no cost to you.
  • Other free tools are available. There are many resources online that can help you better understand and manage your student loan debt without having to pay for advice. For example, if you have federal student loans, you can use the loan simulator tool to explore available repayment plans. Or if you have private loans, you can use a student loan refinance calculator to see how much money refinancing could save you on interest.
  • Some advice offers are scams. Unfortunately, many scammers seek to take advantage of student borrowers who desperately need help. If you decide to pursue student loan advice, be sure to work with a reputable advisor and watch out for red flags, such as loan cancellation guarantees or other too-good-to-be-true promises. .

Learn more: Student Loan Refinance Calculator: Should I Refinance?

How much does student loan counseling cost?

The cost of student loan advice depends on the agency you work with as well as the level of service you want, which is usually split into two tiers.

  1. First level : With this option, the advisor will carefully review your finances and help you develop a repayment strategy for your loans. It usually costs between $40 and $50.
  2. Level two: With this level, the advisor can join a conversation with you and your repairer to discuss your options. This way, you can be sure to choose the most optimal repayment plan for your needs. This level of advice typically costs between $200 and $600.
Here are some examples of prices you might encounter from credit counseling agencies:

Although the information provided by credit counselors can be found for free, it may be worth paying for a counseling session if you need help understanding your options. Just be sure to choose a level of advice that fits your budget, as these costs can add up quickly.

To verify: Student Loan Rehabilitation vs. Consolidation: Getting Out of Default

How to Determine if a Student Loan Counselor is Right for You

While student loan advice can be helpful in some cases, it’s not for everyone. Here are some situations where credit counseling might be a good idea:

  • You are overwhelmed with your student loan debt. If you have high student debt, it can be difficult to know how to manage it. A student loan counselor can help you clearly understand the status of your student loans and how to manage and repay them.
  • You don’t know 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 researching repayment options. While there are many free resources for student loan repayment strategies available online, it can be time consuming to sift through them and decide which option is right for you. A student loan counselor can break this information down into easy-to-understand terms and can save you time going through it yourself.
If you’re not sure where to start with your student loans, here are some other resources that can help:

Where can I find student loan advice?

There are many non-profit organizations that offer student loan advice. Prices vary depending on the agency you work with, so you should be able to find an option that suits your budget.

A good starting point is the NFCC or one of its partners. This non-profit organization is one of the oldest credit counseling agencies operating in the United States and provides advice for almost all types of debt, including student loans, credit cards, mortgages, etc. .

Be sure to gather your student loan information (such as your loan manager and loan amount) before contacting a student loan counselor.
  • If you have federal student loansyou can consult your loans via the National Student Loan Data System.
  • If you have private student loans, you should be able to find your lenders and loan amounts on your credit report. You can check your credit report for free on a site like AnnualCreditReport.com.

Keep reading: What is student loan deferral?

About the Author

Catherine Pomroy

Kathryn Pomroy has been a personal finance writer for over seven years with work featured on LendingTree, Intuit/QuickBooks, FundThrough, insure.com, finder.com, NextAdvisor, and more.

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