Does anyone relish the thought of paying student loans? Are there former students out there eagerly awaiting the money that gets withdrawn from their bank accounts each month? Probably not.
Nonetheless, if you’re dreading your student loan payments each month because you aren’t sure whether you’ll be able to cover the minimum payment, there are solutions you could consider. One option graduates struggling to make the minimum payments on their student loans might consider is hiring a student loan consultant to help create a customized repayment plan.
There are pros and cons to hiring a student loan consultant. On the one hand, their advice and advocacy can be invaluable, but on the other hand, some consultants may not be worth the expense.
We want to be clear that we’re neither advocating nor dissuading readers from hiring a student loan consultant—this article is not meant to be advice. We just want to make sure you have some key facts to help with an informed decision. Here are a few things to keep in mind if you’re considering a student loan consultant.
What is a Student Loan Consultant?
Americans owe more than $1.5 trillion in student loans, according to Pew Research Center . 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
The five basic things student loan consultants can help you with include recommending a student loan repayment strategy, offering personalized guidance specific to your finances, explaining student loan jargon, researching your loan details, and calling 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.
Understanding What You’re Paying For
The cost of a student loan consultant can vary from around $300 to a much higher monthly or yearly rate. 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, doing some research on the topic and finding out what is possible and what sounds too good to be true can help you weed out any not-legit (read: 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 are available to everyone, without paying a fee. Something to look into before seeking out a student loan consultant could be federal repayment plans.
Typically, when you graduate from college or reduce your attendance to under half-time, you’re automatically put on a 10-year Standard Repayment Plan. However, borrowers looking to reduce the monthly payments on their federal student loans could consider income-driven repayment plans, which brings your monthly payment to 10% to 20% of your discretionary income (depending on the plan).
Because these repayment plans extend your loan term, you may pay more interest over the course of your loan, but it should reduce your monthly payments in the immediate.
Asking a Neutral Party for Help
If you have questions about a federal student loan, 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 if that’s a service that appeals to you. 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 . 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. This is a step that may help get you a lower interest rate, lower monthly payments, or a more flexible repayment plan.
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 with a private lender. When you refinance your student loans, you essentially apply for a new loan and then use that loan to pay off one or more existing student loans. And the refinanced loan might come with a better interest rate or loan term (hopefully).
Extending your loan term through refinancing can make your monthly payments more manageable—though it would likely mean paying more in interest over the life of the loan.
Alternately, a refinanced loan with a lower interest rate and shorter loan term could cost you less in interest over the life of the loan. 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.
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SoFi Student Loan Refinance
If you are looking to refinance federal student loans, please be aware that the White House has announced up to $20,000 of student loan forgiveness for Pell Grant recipients and $10,000 for qualifying borrowers whose student loans are federally held. Additionally, the federal student loan payment pause and interest holiday has been extended beyond December 31, 2022. Please carefully consider these changes before refinancing federally held loans with SoFi, since the amount or portion of your federal student debt that you refinance will no longer qualify for the federal loan payment suspension, interest waiver, or any other current or future benefits applicable to federal loans. If you qualify for federal student loan forgiveness and still wish to refinance, leave unrefinanced the amount you expect to be forgiven to receive your federal benefit.
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Notice: SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income-Driven Repayment plans, including Income-Contingent Repayment or PAYE. SoFi always recommends that you consult a qualified financial advisor to discuss what is best for your unique situation.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.
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