If you dread your student loan payments each month because you aren’t sure whether you can afford to cover the minimum payment, know that there are solutions to make student loans more manageable. One option is hiring a student loan consultant to help create a customized repayment plan.
While some borrowers might find their advice valuable, either might find it’s not worth the expense – especially if they’re already struggling to find a way to make their loan payments. Here’s what you should keep in mind if you’re thinking of working with a student loan consultant.
What Is a Student Loan Consultant?
Americans owe nearly $1.8 trillion in collective student loans. As student loan debt has increased, student loan consultants have emerged to help students navigate the loan process. Most student loan consultants work independently from colleges or universities, and are not affiliated with specific repayment programs. Student loan consultants work one-on-one with borrowers to identify their repayment needs and try to set them up on a path of debt payoff success.
Knowing What They Can Help With
There are five main ways a student loan consultant can help you:
• Recommending a student loan repayment strategy
• Offering personalized guidance specific to your finances
• Explaining student loan jargon
• Researching your loan details
• Communicating with lenders on your behalf
Before seeking out a student loan consultant, it might be helpful to identify your specific needs. If you don’t understand the difference between consolidation and refinancing, for example, then talking with a consultant about student loan jargon could be helpful.
If calling lenders sends you into a panic, maybe that’s where you want the consultant’s help. And if you’re struggling to make your minimum monthly payments, you could potentially talk to a consultant about finding a better student loan repayment plan.
💡 Quick Tip: Get flexible terms and competitive rates when you refinance your student loan with SoFi.
Understanding What You’re Paying For
The cost of a student loan consultant can vary widely, and can come in the form of an hourly fee, flat rate, or annual fee. You could expect to pay anywhere from as little $50 to upwards of $600 or more for help from a student loan counselor. Making sure their services are worth the money you are paying is important, of course, and that can be done by confirming that their services aren’t something you could do on your own—like finding a federal income-driven repayment plan (which we’ll get into below). It’s also important to ensure that the cost doesn’t prevent you from making your student loan payments.
Before speaking with a consultant, finding out what is possible and what sounds too good to be true can help you weed out any scammy student loan consultants. And when you’re trying to understand what you can do on your own (without a consultant’s help), a good place to start is the Consumer Financial Protection Bureau .
Knowing What Programs Are Available for Free
A fair number of programs to help with student loan payments are available to everyone, without a fee. For example, before seeking out a student loan consultant, you could look into enrolling in a federal income-driven repayment (IDR) plan.
Typically, when you graduate from college or reduce your attendance to under half-time, you’re automatically put on the 10-year Standard Repayment Plan. However, borrowers looking to reduce the monthly payments on their federal student loans may qualify for an IDR plan, which reduces your monthly payment to a small percentage of your discretionary income and extends the repayment term up to 25 years (the exact details depend on the specific plan you choose). After the repayment period is up, any remaining balance is forgiven (but may be subject to taxes).
The newest IDR plan, Saving on a Valuable Education (SAVE), caps monthly payments at 5% to 10% of your discretionary income and shields more of your income from the payment calculation compared to older plans. It also forgives student loan debt as soon as 10 years into repayment for borrowers with smaller starting balances.
Because these repayment plans extend your loan term, you may pay more interest over the life of your loan. Even so, it could bring much-needed immediate relief and result in some loan forgiveness.
💡 Quick Tip: When refinancing a student loan, you may shorten or extend the loan term. Shortening your loan term may result in higher monthly payments but significantly less total interest paid. A longer loan term typically results in lower monthly payments but more total interest paid.
Asking a Neutral Party for Help
If you have a conflict regarding one of your federal student loans, you can ask for help from the Federal Student Aid Ombudsman Group , which serves as a neutral party. They can resolve discrepancies with loan balances and payments, and help identify loan repayment options. You can also try to resolve the dispute before contacting the Ombudsman Group. Or you can file a complaint through the Consumer Financial Protection Bureau.
Considering a Nonprofit Credit-Counseling Agency
The National Foundation for Credit Counseling can help you find a qualified credit counseling agency, which can aid you in creating a budget and even negotiating a new payment plan with creditors. The U.S. Department of Justice also offers an online database of credit-counseling agencies .
Making Sure the Consultant Isn’t Providing a Redundant Service
It’s important to make sure the consultant’s service isn’t something you could do on your own. For example, you could lower your monthly payment on your federal student loans by opting for an income-driven repayment plan without paying a consultant for their services.
You can also consider consolidating your federal loans through a Direct Consolidation Loan, which is also free. A Direct Consolidation Loan allows you to combine all of your federal loans into one, and gives you a new interest rate that’s a weighted average of your current interest rates, rounded up to the nearest eighth of a percent. While you won’t have a lower overall interest rate, you could lower your monthly payments and simplify the repayment process.
Refinancing Your Student Loans
If you’re looking for alternative ways to pay off your student loan debt, you could also consider student loan refinancing. When you refinance your student loans, you take out a new loan with a private lender and then use the proceeds to pay off one or more existing student loans. Ideally, the refinanced loan has a better interest rate and terms.
Extending your loan term through refinancing can lower your monthly payments. But it does mean paying more in interest over the life of the loan.
Alternatively, refinancing to a lower interest rate and shorter loan term could cost you less in interest over the life of the loan and help you pay it off faster. Keep in mind, however, that refinancing with a private lender means you’ll no longer be able to access federal loan benefits like income-driven repayment plans.
Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.
SoFi Student Loan Refinance
If you are a federal student loan borrower, you should consider all of your repayment opportunities including the opportunity to refinance your student loan debt at a lower APR or to extend your term to achieve a lower monthly payment. Please note that once you refinance federal student loans you will no longer be eligible for current or future flexible payment options available to federal loan borrowers, including but not limited to income-based repayment plans or extended repayment plans.
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