When you were still in college, you might remember going through entrance counseling when taking out your first student loans, and exit counseling before graduation to prepare for repaying them.
But if it’s been a few years since receiving your degree, and you’ve struggled to make those student loan payments, there’s a different type of counseling that many borrowers pursue, though not always wisely.
“Student loan counseling” can mean a few things — and can either help you save or lose money. On one hand, there are services legitimately vested in helping borrowers eliminate debt; on the other, ripoffs in disguise as honest programs.
Find out if student loan debt counseling is right for you and how to spot a scam.
When to choose student loan repayment counseling
Do you need student loan counseling? First, examine your financial situation.
Is it a matter of stretching your budget or making some small changes to better fit your payments into your monthly expenses? Or has your debt mounted so high that it’s placed you on the brink of bankruptcy?
If it’s the latter, a professional student loan counseling program may help. Some of the issues and questions they may be able to troubleshoot include:
Exploring financial goals. Where do you see yourself financially in a few years? When is your target date for paying off your loans?
Building a budget. One reason many people struggle with debt is because they don’t have a budget. On the simplest level, counseling is a great resource for learning how to save, cut back on spending, and prioritize your expenses — not just your loans.
Simplifying difficult information. A specialized loan counselor can help break down confusing loan lingo, educate you on interest rates and lending practices, and teach you about how your loans affect your credit score.
Organizing your loans. One reason you may be saddled with debt is a lack of knowledge of the types of loans you have. Student loan counseling can help you delineate the differences between federal loans, private loans, and the like, as well as how to juggle multiple payments.
Understanding your options. Instead of a never-ending cycle of debt, counseling can be a great asset for looking into repayment plans with your provider, refinancing, and other options you may be eligible for.
Assessing alternatives. If repayment is simply not possible, a skilled counselor will brainstorm some ideas to keep you financially healthy without going into further debt. Are there ways to reduce your interest rate, forgive or manage your debt, or try a loan rehab program?
Developing a plan. Moving forward from counseling, you’ll have an actionable plan to pay down your debt.
In order to find a genuine student loan counseling program, try checking with your loan provider first; they may be the first and last place you’ll need to look for some consultation (usually free of charge).
You can also contact the U.S. Department of Education for free federal student loan counseling.
However, some of the best and most valuable resources are not-for-profit credit counseling agencies, which often have their own student loan counseling divisions. Many representatives are also certified as credit counselors.
Avoiding Student Loan Counseling Scams
Not everyone purporting to be a student loan counselor is on the level. It makes sense that with all the money you’re putting into paying down your debt, scammers will do their best to get their hands on that cash.
Don’t take on the services of just anyone. Here are some warning signs to be cautious of when searching for a student loan counselor:
1. High fees early on
One of the differences between nonprofit counseling services and scammers operating on a for-profit platform are the fees they charge.
If you find a service that charges high fees from the get-go, there’s a chance your money will be pocketed without much done in the way of helping you with your debt. Some scam victims have reported that they’ve paid exorbitant monthly or annual fees for services they could have done themselves for free.
2. Results and promises that sound too good to be true
Proper student loan counseling should include some of the examples we listed above: it should be made up of actionable solutions that require you to be proactive about your debt.
So if you connect with a company that promises to cancel your loans, forgive your debt, rescue you from default, or make payments for you, don’t believe any of it.
And no, it doesn’t matter who’s going to the White House next year; there is no such thing as the “Obama Student Loan Forgiveness Program.”
3. Marketing, name, or logo closely resembles a government source
To gain trust in unassuming, vulnerable people struggling with debt, many illegitimate companies may use words like “national” or “federal” in their titles to sound more official.
However, if they’re not linked to the Department of Education or don’t have a .gov URL extension, be wary. Your best bet is to work directly with your loan provider and keep looking for a real student loan counselor.
4. You’re asked for sensitive personal and financial info
If you’ve hooked up with a student loan debt counselor and they ask for your Social Security number, Federal Student Aid PIN number, bank account info, or any other sensitive personal or financial information, you’re likely opening yourself up to a scam (and potential identity theft.)
An accredited counselor is here to counsel you, not troll through your finances. Be particularly alarmed if you’re asked to sign a third party authorization or power of attorney to one of these organizations; you could be signing over everything you have to these scammers.
5. They advertise heavily on TV, radio, social media, etc.
Though one would think that social media, online, TV, or radio outreach signifies a bona fide service, it couldn’t be farther from the truth.
Abundant, widespread advertising methods indicate a for-profit business, and sometimes, predatory practices. At the very least, look them up online. Do they seem like an honest company? Address your doubts by reading reviews and seeing what services they offer.
But, as mentioned above, give preference to the .govs and .orgs over the .coms.
In the end, the most important thing is not to be ashamed or embarrassed to pursue a student loan counseling service. Seeking help is always preferable to drowning in debt, but it’s important to work with the right organization with your needs — not their profits — in mind. Remember to look for the warning signs of a scam.
If you believe you’ve been a victim of any type of student loan scam, experts recommend contacting the Consumer Financial Protection Bureau.
Interested in refinancing student loans?Here are the top 6 lenders of 2018!
|Lender||Variable APR||Eligible Degrees|
|Check out the testimonials and our in-depth reviews!
1 Important Disclosures for Earnest.
To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest fixed rate loan rates range from 3.89% APR (with Auto Pay) to 6.97% APR (with Auto Pay). Variable rate loan rates range from 2.47% APR (with Auto Pay) to 6.30% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of Month/Day/Year, and are subject to change based on market conditions and borrower eligibility.
Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 08/21/18. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at firstname.lastname@example.org, or call 888-601-2801 for more information on ourstudent loan refinance product.
© 2018 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.
2 Important Disclosures for Laurel Road.
Laurel Road Disclosures
APR stands for “Annual Percentage Rate.” Rates listed include a 0.25% EFT discount, for automatic payments made from a checking or savings account. Interest rates as of 11/8/2018. Rates subject to change.
Variable rate options consist of a range from 3.27% per year to 6.09% per year for a 5-year term, 4.64% per year to 6.14% per year for a 7-year term, 4.69% per year to 6.19% per year for a 10-year term, 4.94% per year to 6.44% per year for a 15-year term, or 5.19% per year to 6.69% per year for a 20-year term, with no origination fees. APR is subject to increase after consummation. The variable interest rate will change on the first day of every month (“Change Date”) if the Current Index changes. The variable interest rates are based on a Current Index, which is the 1-month London Interbank Offered Rate (LIBOR) (currency in US dollars), as published on The Wall Street Journal’s website. The variable interest rates and Annual Percentage Rate (APR) will increase or decrease when the 1-month LIBOR index changes. The variable interest rates are calculated by adding a margin ranging from 0.98% to 3.80% for the 5-year term loan, 2.35% to 3.85% for the 7-year term loan, 2.40% to 3.90% for the 10-year term loan, 2.65% to 4.15% for the 15-year term loan, and 2.90% to 4.40% for the 20-year term loan, respectively, to the 1-month LIBOR index published on the 25th day of each month immediately preceding each “Change Date,” as defined above, rounded to two decimal places, with no origination fees. If the 25th day of the month is not a business day or is a US federal holiday, the reference date will be the most recent date preceding the 25th day of the month that is a business day. The monthly payment for a sample $10,000 loan at a range of 3.27% per year to 6.09% per year for a 5-year term would be from $180.89 to $193.75. The monthly payment for a sample $10,000 loan at a range of 4.64% per year to 6.14% per year for a 7-year term would be from $139.65 to $146.76. The monthly payment for a sample $10,000 loan at a range of 4.69% per year to 6.19% per year for a 10-year term would be from $104.56 to $111.98. The monthly payment for a sample $10,000 loan at a range of 4.94% per year to 6.44% per year for a 15-year term would be from $78.77 to $86.78. The monthly payment for a sample $10,000 loan at a range of 5.19% per year to 6.69% per year for a 20-year term would be from $67.05 to $75.68.
However, if the borrower chooses to make monthly payments automatically by electronic funds transfer (EFT) from a bank account, the variable rate will decrease by 0.25%, and will increase back up to the regular variable interest rate described in the preceding paragraph if the borrower stops making (or we stop accepting) monthly payments automatically by EFT from the designated borrower’s bank account.
3 Important Disclosures for SoFi.
4 Important Disclosures for LendKey.
Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
5 Important Disclosures for CommonBond.
Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown.
All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 2.28% effective October 10, 2018.
6 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|2.47% – 6.99%3||Undergrad & Graduate|
|2.47% – 6.30%1||Undergrad & Graduate|
|2.51% – 8.09%4||Undergrad & Graduate|
|3.02% – 6.44%2||Undergrad & Graduate|
|2.69% – 7.21%5||Undergrad & Graduate|
|2.79% – 8.39%6||Undergrad & Graduate|