What you need to know about student loan counseling – credible | Vette Leader

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

This is what you should know about student loan counseling:

How does student loan counseling work?

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

Talking to a student loan counselor generally involves a comprehensive 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 that suits your individual budget and circumstances.

Benefits of Counseling

Here are some of the potential benefits student loan counseling offers:

  • Understand your repayment options better. A student loan advisor can explain each of the repayment options available to you. For example, if you have federal student loans, you can enroll in an income-controlled repayment plan (IDR) to receive payments based on your income. Or you may be able to run a student loan forgiveness program.
  • Explore federal consolidation or private refinancing. The counseling may also offer advice on whether federal student loan consolidation or private student loan refinancing is right for your situation.
  • Create a complete plan of action. After reviewing your finances and discussing repayment options, a student loan counselor will help you create a thorough game plan for managing your student loan debt.

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

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

disadvantages of counseling

And here are some of the potential downsides that could come with student loan counseling:

  • Does not provide information that you cannot find yourself. All information provided by student loan advisors is available to you online free of charge.
  • Other free tools are available. There are many online resources that can help you better understand and manage your student loan debt without having to pay for counseling. For example, if you have federal student loans, you can use the Loan Simulator tool to explore available repayment plans. Or if you have personal loans, you can use a student loan refinance calculator to see how much money refinancing could save you in interest.
  • Some counseling offers are scams. Unfortunately, there are many scammers out there trying to take advantage of student loan borrowers who are desperate for help. If you decide to seek student loan counseling, be sure to work with a reputable counselor and be alert for red flags — like loan forgiveness guarantees or other promises that seem too good to be true.

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

How much does student loan counseling cost?

How much student loan counseling costs depends on which agency you work with and the level of service you want, which is usually broken down into two tiers.

  1. Level one: With this option, the advisor will thoroughly review your finances and help you create a repayment strategy for your loans. This usually costs $40 to $50.
  2. stage two: With this level, the advisor can participate in a call with you and your servicer to discuss your options. So you can be sure to choose the best repayment plan for your needs. This level of consultation generally costs $200 to $600.
Here are some examples of the rates you may find from credit counseling agencies:

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

Cash: Student Loan Reorganization vs. Consolidation: Getting Out of Default

How to determine if a student loan counselor is right for you

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

  • You are overwhelmed by your student loan debt. When you have a large amount of student loan debt, it can be difficult to know how to deal with it. A student loan advisor can help you understand the condition of your student loans and how to manage and repay them.
  • You are unsure which repayment strategy is right for you. Federal student loan borrowers have access to several different repayment schedules. A student loan advisor can help you choose the option that best suits your financial situation.
  • You want to save time looking for repayment options. Although there are many free student loan repayment strategies resources available online, it can be time consuming to go 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 save you time when you have to go through everything yourself.
If you’re not sure where to start with your student loans, here are some other resources that may help:

Where can I find student loan counseling?

There are many nonprofit organizations that offer student loan counseling. Prices vary depending on the agency you work with, so you should be able to find an option that fits your budget.

A good starting point is the NFCC or one of its partners. One of the oldest credit counseling agencies in the US, this nonprofit organization offers advice on almost every type of debt — including student loans, credit cards, mortgages, and more.

Be sure to gather your student loan information (like your servicer and loan amount) before contacting a student loan advisor.

  • If you have federal student loansyou can check your loans through 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 through a website like AnnualCreditReport.com.

Continue reading: What is student loan deferral?

About the author

Kathryn Pomroy

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

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