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Student Loan Counselors: Who They Are and How They Can Help
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Originally published Jan. 30, 2019.
Although student loan counseling isn’t necessary for most borrowers, there are times when it can help. If you’re really struggling to manage your student loans on your own, it could be worth hiring a student loan counselor to help you sort things out.
This report will look at five ways a student loan counselor can help you come up with a plan to conquer your education debt, and discuss how to decide whether you need a counselor in the first place.
The cost of student loan counseling varies, but you can expect to pay somewhere between $50 and $100 for an initial session with a nonprofit student loan counselor.
Nonprofit organization GreenPath, for instance, charges $50 for a session with a student loan counselor, who will go over your repayment options and help you come up with a customized plan. If you want an in-depth analysis of your student loan situation, you can sign up for its enhanced support plan for $200.
Clearpoint, another nonprofit organization, charges $99 for student loan counseling, as well as a one-time fee that varies by state. While most student loan counselors work for nonprofit organizations, you may also find for-profit student loan counseling.
For-profit counseling will likely cost more, however. The Student Loan Planner, for instance, charges between $395 and $595 for student loan counseling, depending on the amount of debt you carry.
Make sure you understand exactly what the costs will be before signing up for student loan counseling.
Although they treat clients as individuals facing unique repayment challenges, counselors typically use the same formula. I know because I’m a student loan counselor myself.
Unlike your federal student loan entrance or exit counselor, a student loan counselor is typically a certified individual working for themselves or at a nonprofit or private company. They don’t need to be expensive though — by looking around, you can usually avoid exorbitant fees for financial professionals like counselors unless you prefer spiffy concierge-level service.
Aside from the cost, here’s what to expect if you decide to sit down with a counselor for a consultation on your repayment.
Your counselor will aim to build a rapport with you, but they’ll simultaneously be looking to learn about your debt situation. You should expect a multitude of questions about your loans, income, employment and tax-filing status. This information is necessary to develop an action plan for repayment.
You might not have all this information off the top of your head, or even know how to find it. Although a counselor has no special, private portals to access, they know where to get your info quickly and easily.
To start, they’ll help you use the Federal Student Aid website to catch up on your federal loans, as well as checking up on your private loans via your credit report.
When you take part in student loan counseling, you’ll need to provide the following information:
- Loan program: Direct Loan, Perkins Loan or Federal Family Education Loan (FFEL)
- Loan status: Grace period, active repayment, delinquency or in default
- Borrower type: Student or parent
- Disbursement date: When you borrowed your loans
Each of these data points – plus basics like your servicer, monthly payments and remaining balance – could affect your eligibility for repayment strategies, such as switching repayment plans.
During this second stage of the student loan counseling process, a counselor might prove their worth as an objective party that’s able to take a hard look at your repayment problems. You might not feel up to the task yourself, or that your lender or loan servicer has neither the time nor interest to mull over your situation.
A counselor would help you identify why your repayment isn’t going the way it could, whether that’s because of a debt collector breathing down your neck or money issues specific to your situation. If your loans are a strain on your finances, for example, the counselor might review your budget.
Once you’ve identified the challenges together, the counselor could explain your range of opportunities. If you didn’t find room in that budget to make consistent loan payments, the counselor might explain the value of switching to an income-driven repayment (IDR) plan.
Now that you know your problems can be solved, your counselor will likely lead a goal-setting session. They’ll ask what you want out of your repayment, whether it’s making your repayment more affordable, putting a finish line on your debt, or something in between.
Before working toward your loan repayment goals, you and your counselor would review your best ways to achieve them. Depending on your loan status, you might only have two or three options at your disposal. Prepare to evaluate these approaches in exhaustive detail, comparing their pros and cons.
For many borrowers, these options include:
- Forgiveness and cancellation: There are many ways to receive a partial or full forgiveness of your loan balance, including debt forgiveness based on your health, career, school or other factors.
- Switching repayment plans: Transitioning your federal loans from their standard, 10-year term to an IDR plan, for example, would limit your monthly dues to a percentage of your discretionary income.
- Deferment and forbearance: Applying to pause your loan payments because of eligible causes, such as a job loss or military service, could give you the break you need before resuming payments.
- Rehabilitation: If your federal loans are in default, you could rehabilitate them with nine straight payments of a lower, agreed-upon amount to remove derogatory marks from your credit report.
- Consolidation: You could group your federal loans into a direct consolidation loan to get out of default or simplify your repayment going forward.
- Student loan refinancing: If you’ve handled your federal and private loan repayment well to this point, you might qualify to consolidate your debt – and potentially lower your interest rate – with a private lender seeking creditworthy candidates.
Keep in mind that none of your specific repayment options are likely to be perfect or immediate solutions to your education debt. A good counselor should temper your expectations by explaining what each option could deliver, and at what cost. An IDR plan, for example, lowers your monthly payments but increases the total cost of your loan due to mounting interest.
Hopefully, you and your counselor will agree on a specific solution for your repayment problem. Although the onus will be on you as the borrower to execute it, your counselor should provide you with a written action plan to serve as the map for your journey.
If, for instance, you’ve decided that switching to Income-Based Repayment, a type of IDR plan, is in your best interest, the plan should detail:
- What information you need to apply for Income-Based Repayment, such as your gross monthly income
- How to submit an IDR plan request via StudentLoans.gov
- What next steps you need to complete once your servicer has accepted your plan request
- How a revised budget or spending plan ensures you can afford your monthly payment
The document should also list your new estimated monthly payment, payoff date and total loan cost.
If the counselor is genuinely working to help you achieve your goals, that should be reflected in the plan. If it isn’t, remember that the counselor works for you. Ask them to head back to the drawing board.
Like anyone who assists your student loan repayment, they’re doing just that – assisting. You wouldn’t count on your counselor to take every step of your repayment for you.
However, you should be able to rely on a counselor to check in and follow up on your progress. You might even call upon them to assist further, such as in the case that your loan servicer has unfairly denied your request to switch repayment plans.
Good counselors don’t end the relationship when their client walks out the door or hangs up the phone. Instead, it should continue until you’re completely done with your debt.
When searching for a nonprofit student loan counselor, we recommend sticking with agencies that are either…
- …affiliated with the National Foundation for Credit Counseling (NFCC) or the Financial Counseling Association of America, or
- …accredited through a reputable organization, such as the Council on Accreditation
NFCC, a leading nonprofit financial counseling organization, offers this tool to help you find an affiliated agency in your local area. Both GreenPath and Clearpoint, for example, are NFCC-affiliated nonprofits that offer student loan counseling.
Once you’ve chosen an agency, you might also look on consumer review sites such as the Better Business Bureau to find out what customers have to say about its services.
Before choosing a counselor, you can also ask about their qualifications, experience and approach to working with borrowers to make sure they’d be a good fit for you.
As mentioned, there are also options for for-profit student loan counseling from private companies. Although this counseling could be useful, it will likely cost more than its nonprofit counterpart.
If you go this route, make sure to check the counselor’s qualifications (e.g., a certification as a student loan counselor or certified financial planner) before signing up.
Financial experts’ advice on student loans shouldn’t be ignored, but one-on-one consultations aren’t necessary for every borrower.
You could work your way through the five steps above using free, accessible online sources, including LendingTree’s student loan calculators. On the other hand, you could find that a certified been-there-and-done-that pro could get you the answers you need without as much effort or frustration.
Whether or not you plan to work with a pro-bono counselor, or even to hire a private one, consider all the people with helpful advice on repayment. Sometimes it’s good to have some extra assistance to push you to the debt-free finish line.