What You Need to Know About Student Loan Counseling

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

Here’s what you should know about student loan counseling:

  • How does student loan counseling work?

  • How much does student loan counseling cost?

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

  • Where to find 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 typically over the phone.

Talking to a student loan counselor will generally involve a comprehensive assessment of your financial situation, including your student loan debt and repayment options. Afterward, the counselor will help you develop a payoff strategy for your loans that’s suited to your individual budget and circumstances.

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 could sign up for an income-driven 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 a good fit for your situation.

  • Create a complete plan of action. After going through your finances and discussing repayment options, a student loan counselor will help you come up with a thorough game plan for tackling your student loan debt.

Tip: 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 vetted refinancing lenders in just two minutes.

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

Disadvantages of counseling

And here are some of the possible disadvantages that could come with student loan counseling:

  • Doesn’t offer information you can’t 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 online resources that can help you to 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 private loans, you could use a student loan refinancing calculator to see how much money refinancing could save you on interest.

  • Some counseling offers are scams. Unfortunately, there are plenty of scammers looking to take advantage of student loan borrowers desperate for help. If you decide to pursue student loan counseling, make sure to work with a reputable counselor and watch out for red flags — such as guarantees of loan forgiveness or other promises that are 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 will cost depends on which agency you work with as well as the level of service you want, which is usually divided into two tiers.

  1. Tier one: With this option, the counselor will thoroughly look over your finances and help you craft a repayment strategy for your loans. This typically costs $40 to $50.

  2. Tier two: With this tier, the counselor can join a conversation with you and your servicer to discuss your options. This way, you can be sure to choose the most optimal repayment plan for your needs. This level of counseling generally costs $200 to $600.

Here are a few examples of the pricing you might come across from credit counseling agencies:

While the information provided by credit counselors can be found for free, it might be worth paying for a counseling session if you need help understanding your options. Just be careful to choose a counseling tier that fits your budget as these costs can add up quickly.

Check Out: Student Loan Rehabilitation 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 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 it 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.

If you’re not sure where to start with your student loans, here are some other resources to can help:

Where to find student loan counseling?

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

A good place to start is with the NFCC or one of its partners. This nonprofit organization is one of the oldest credit counseling agencies operating in the U.S., and it provides counseling for almost any kind of debt — including student loans, credit cards, mortgages, and more.

Be sure to gather your student loan information (such as your servicer and loan amount) before reaching out to a student loan counselor.

  • If you have federal student loans, you can review 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 site like AnnualCreditReport.com.

Keep Reading: What is Student Loan Deferment?