Deciding the best way to pay back student loans can be intimidating for many graduates. Should you consolidate your student loans? Should you switch to a different repayment plan? Does it make sense to refinance with a private loan?
Answering these questions takes time and effort — and the confusing financial jargon doesn’t help. For busy people with demanding jobs, families to care for, and high student loan balances, it can be hard to do the research and determine the best course of action to avoid defaulting on your loan.
Fortunately, for all these reasons, there are now companies and independent consultants who specialize in helping people devise student loan repayment plans. But is it worth hiring a consultant to help you with your student loan questions?
What student loan repayment consultants do
Understanding how a professional can help isn’t so clear cut when it comes to the student loan business. But a consultant in this area can offer a number of services, including:
- Recommend student loan repayment strategies
- Offer personalized guidance based on your personal financial situation
- Explain student loan jargon in a way you can understand
- Give recommendations on what to do if your life plan changes
- Save you time by researching your loan details and calling lenders on your behalf
Jan Miller is an example of a student loan consultant who performs these services. A seasoned student loan consultant with more than 17 years of financial services experience, Miller offers what he coined the “Student Loan Business Plan™,” which considers a number of personal factors to create a customized student loan repayment plan that fits your budget and lifestyle.
Some credit counseling companies also offer specialized advice regarding student loan repayment. Like independent student loan experts, these organizations can look at your entire financial picture, including whether you also have other types of debt, to provide suggestions on how to approach a student loan repayment plan.
Finally, many student loan consultants specialize in helping borrowers within specific career fields. For instance, it’s not uncommon for medical residents to work in excess of 80 hours per week — unusual schedules and a stressful work environment make calling their loan servicers and researching the best repayment plans nearly impossible.
PGPresents is an example of an independent student loan consulting firm that works with medical students and other professionals who have significant student loan debt and little free time available to negotiate student loan repayment plans.
Student loan consultant costs
Student loan consultants can charge anything from $300 for one phone call to a higher monthly or yearly flat fee. So, is the cost worth it?
Well, student loans are designed so that you can take care of your repayment needs without such personalized assistance. If, however, you are the type of person who needs a second opinion or is far too busy to research all your options on your own, a student loan consultant might be the best bet for you.
Also, remember the goal is to pay back your student loans as quickly as possible, minimizing the amount of interest you have to pay over time. If paying a consultant to help you means you can accomplish this, it’s probably a good choice. If you can save money going at it on your own with the assistance of free information and tools, even better.
Whichever you choose, the important part is that you’re making student loan repayment a priority.
Alternatives to student loan consultants
While there are many student loan consultants available with varying fees, there are also plenty of free resources available to help student loan borrowers learn about the different types of repayment options and determine which one is best.
- The Department of Education website: The government’s financial aid website is filled with tools and simple answers to questions about all of your federal loans. You can find out about how to switch your repayment plan, what to do if you temporarily can’t pay your loans, and how to qualify for a forgiveness program.
- Online calculators: Websites such as Student Loan Hero provide calculators to help you answer pretty much any question you might have about your student loans. If you’re wondering whether you should refinance your student loans, there’s an easy-to-use calculator available to run the numbers for you. There’s also prepayment, consolidation vs. refinancing, and different repayment plan calculators available.
- American Student Assistance: American Student Assistance (ASA) is a free service that helps you pick the best repayment plan, figure out how to communicate with your loan servicer, decide how to file the appropriate paperwork, and find solutions when you can’t afford your payment. You just need to register with ASA’s financial education site Salt.
Be smart when using a student loan consultant
Although student loan consultants can be helpful for keeping or helping you out of debt, it’s important to remember it’s a fairly new type of financial professional. In fact, the Wall Street Journal once described the student loan consultant as “a vocation so new that regulators don’t oversee it and private firms don’t measure it.”
As with any new, unregulated industry, some “professionals” will attempt to abuse the system, which is why consumers should always use caution.For example, one of the largest student loan consulting companies, GL Capital Partners, recently made news when it was shut down and their CEO was arrested for fraud.
While this is certainly not indicative of the student loan consultant industry as a whole, it does reinforce the importance of shopping around, reading reviews, and getting referrals before working with any student loan consultant if you choose that route. Start with the free options available to you first before trying a student loan consultant to avoid any problems and to not pay more than necessary.
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