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Paying off student loans is like maneuvering through an endless obstacle course. With so many repayment options — standard plans, extended plans, income-driven student plans — it can be hard to know if you’re taking advantage of the best plan for your situation. Many borrowers are currently waiting to see if cancellation legislation will be successful or not and the payments on federal student loans remain paused — private loans have not been on hiatus. Sooner or later all borrowers will have to make payments on their loan balances.
An entire industry has sprung up in recent years under the guise of helping student loan borrowers manage their loans — for a fee, of course.
Among the many services that promise to help you manage your student loan repayment, the counseling offered by nonprofit credit counseling agencies is among the most trustworthy and affordable.
While you can do everything a student loan counselor would do yourself — review your student loans, contact issuers, potentially apply for a new repayment plan — a counseling session can help you work through your situation if you’re feeling overwhelmed or falling behind, and help you tackle student loan debt in a way that’s tailored to your unique financial situation
What is student loan counseling?
Student loan counseling by nonprofit credit counseling agencies focuses on giving you the knowledge and tools to understand your loans and figure out the best way to pay them back.
There are generally two tiers:
The first and most common is a deep dive into your student loan debt and your financial situation. The counselor will craft a plan with you to optimize your repayment plan, whether that means consolidating your loans, applying for student loan forgiveness, getting out of default or even pursuing bankruptcy forgiveness for your student loans. Then you will execute that plan on your own.
The second tier involves a more hands-on approach by the credit counselor. In addition to an analysis of your situation, the credit counselor will help you get on the student loan repayment plan that’s best for you. This can mean joining you on a call with your student loan issuer to help guide the conversation or walking you through forms you need to fill out.
How student loan counseling works
Most student loan counseling sessions take place over the phone.
Search online to find a few qualified nonprofit credit counseling agencies that offer student loan counseling. Before you choose one, vet each counselor to be sure you’d feel comfortable working with them.
Have documents about your income, expenses and student loans gathered before going into your counseling session to save time.
What does it cost?
Many agencies offer some general student loan counseling for free, but more-involved help usually carries a fee.
For example, Money Management International typically charges a flat rate of $39 for its online decision tool and an additional $99 for support from a counselor over the phone; however, its student loan counseling is free through March 31, 2023. Others, like GreenPath, charge $200 for the enhanced level of student loan support, but its basic student loan counseling option is currently free.
As with any service, be sure to get the prices in writing before agreeing to a session of student loan counseling.
Is it right for you?
To determine if student loan counseling is right for you, think about whether you feel comfortable with and capable of assessing your student loan repayment possibilities. If so, reach out to your issuer; it has the responsibility to talk through your options with you, at no cost.
If you think you need some help, the first tier of counseling can give you a deeper understanding of your student loans and the tools to help you optimize your repayment plan. After your counseling session, reflect on whether you feel comfortable taking the initiative on your student loan repayment.
If you do, go ahead and enact the plan. Otherwise, reach out to your student loan counselor again to talk about your options for the second tier of counseling. This more in-depth form of student loan counseling could be useful if you want help working with your loan issuer or filling out forms. Again, before you commit to this, get all fees in writing.
There is no one-size-fits-all answer as to whether student loan counseling from a nonprofit credit counseling agency is right for you. But if you're feeling overwhelmed and want help, a counseling session could be the first step toward getting your loan repayment plan in order.