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Student Loan Credit Counseling

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Repaying student loans can get complicated quickly. Which repayment program do you sign up for? Could you be eligible for forgiveness? Is there a penalty for repaying loans early?

No, there is no prepayment penalty for repaying your student loans early, but should you? This is where a student loan counselor’s tailored advice could come in handy.

Everyone who receives federal student aid undergoes exit counseling, where they guide you through various repayment options and caution you on the consequences of default. That is a lot of information to retain in a 20- or 30-minute course.

Fortunately, student loan credit counselors are around to help bridge the gap in your knowledge or memory.

Types of Student Loan Counseling

There are two levels of student loan counseling. The first tier walks you through your best options, while the second tier may go as far as to call your student loan servicer on your behalf and enroll in the program that best suits your needs.

Tier-One: In the first tier, the credit counselor takes an in-depth look at your finances. This includes any open credit accounts, like a car loan, mortgage or credit card. They also will look at your income and other monthly expenses. You have to be up front about your spending habits to get the most out of student loan counseling.  They need to know exactly where you stand financially so they can craft a unique plan that suits your needs. It’s then up to you to put that plan into motion.

This may mean calling up your student loan servicer and asking about loan forgiveness. Or it could mean going online and researching suitable student loan refinancers.

Tier-one services usually cost between $40-$50.

Tier-Two: Tier-two has counselors doing a little more leg work on your behalf. He or she can join in on the conversation between you and your student loan servicer to ask or answer any questions you may have about your loan options.

Student loan counselors are familiar with all the different repayment options and terms. Having one on the line will streamline the process and decrease the risk of signing up for a sub-optimal repayment plan.

Tier-two services are a little pricier and can cost between $200-$600.

This option won’t be for everybody. If you’re confident in your ability to understand the pros and cons of each repayment plan, then there’s plenty of free information available online to help guide you along your journey to repay your student loan debt.

How Student Loan Counseling Works

Most student loan counselors are a call or click away. Usually, the entire session can be done over the phone or online.

The prices will vary by agency and tier. Most tier-one services will cost a flat rate of $40-$50. Tier-two services charge flat rates of $200-$250.

Some agencies price their tier-two services by the number of student loan servicers they contact. If your loans are scattered among multiple servicers this could end up costing you as much as $600-$800.

Don’t throw in the towel just yet. Nonprofit credit counseling agencies often will negotiate fees and may waive them entirely if you’re struggling to make ends meet.

Another thing: have all your income and expense documents in front of you before making the call. Things will go a lot smoother and quicker for both you and the counselor if you’re not holding up the conversation to rummage drawers for a W-2 or paystub.

Finding a Reputable Student Loan Counselor

Student loan counseling requires you to share a lot of sensitive information with your counselor, so you need to make sure you’re dealing with a reputable credit counseling agency.

Start with the National Foundation for Credit Counseling (NFCC).

The NFCC is the oldest and largest credit counseling agency in the U.S. Most nonprofit credit counseling agencies are accredited by the NFCC, and their counselors must be accredited regularly by the Council on Accreditation (COA). The COA is a third-party nonprofit accreditation organization. They review thousands of social service programs and enforce best-practice standards across an array of industries.

Suffice it to say, nonprofit credit counseling agencies are the safe choice because they are held to a higher set of standards and guidelines.

NFCC member agencies are reevaluated every four years by the COA. They also cost less than their counterparts, and you can be sure you are not dealing with a credit counseling scam.

Keep in mind: even if an organization claims to be a nonprofit, you should still do your share of research and vetting before revealing any sensitive information about yourself or handing over any money.

Is Student Loan Credit Counseling Right for You?

Student loan credit counseling is a wise move for anybody looking ahead at a long road of student loan debt.

The average graduate takes 20 years to repay all student loan debt.

You couldn’t rush the process even if you wanted to, so you might as well map it out in advance.

Choosing the wrong repayment program could cost you thousands over the years. The good news is tier-one counseling should cost you no more than $50.

Should you spend $200 or more dollars on student loan credit counseling?

The truth is, everything a counselor does is within your ability to do as well.

You can make the calls. You can research the various repayment programs. It will take time and you may have to play around with some numbers before getting the results you want, but don’t feel pressured into blowing your budget on counseling if you feel up to the task of handling it yourself.

Here is a list of all the federal student loan repayment options available:
  • Income-based repayment plans
  • Deferment and forbearance
  • Graduated repayment plans
  • Extended repayment plans
  • Student loan forgiveness
  • Pay as you earn program
  • Standard repayment plans
  • Income contingent and income sensitive repayment
And here’s a list of every federal student loan servicer:
  • CornerStone: 1-800-663-1662
  • FedLoan Servicing (PHEAA): 1-800-699-2908
  • Granite State – GSMR: 1-888-556-0022
  • Great Lakes Educational Loan Services: 1-800-236-4300
  • HESC/Edfinancial: 1-855-337-6884
  • MOHELA: 1-888-866-4352
  • Navient: 1-800-722-1300
  • Nelnet: 1-888-486-4722
  • OSLA Servicing: 1-866-264-9762

You can find out who your federal student loan servicer is by calling the Federal Student Aid Information Center (FSAIC) at 1-800-433-3243.

About The Author

Bents Dulcio

Bents Dulcio writes with a humble, field-level view on personal finance. He learned how to cut financial corners while acquiring a B.S. degree in Political Science at Florida State University. Bents has experience with student loans, affordable housing, budgeting to include an auto loan and other personal finance matters that greet all Millennials when they graduate. He has a prodigious appetite for reading, which he helps feed with writing from Scottish philosopher Adam Smith, the “Father of Capitalism.” Bents writing also has been published by JPMorgan Chase, TheSimpleDollar and


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