Why You Don’t Need to Pay for Student Loan Counseling

Updated on November 6, 2023
At a Glance: Beware of student loan counseling scams. Dishonest companies prey on borrowers, promising quick solutions but worsening financial situations. Distinguish genuine services by avoiding upfront fees, questioning immediate loan forgiveness, resisting sales pressure, guarding personal details, and being cautious with online ads. Research and verify before committing.

In today’s day and age, student loan debt has become a burden for many individuals. It’s no secret that managing student loans can be overwhelming and confusing. With so many companies offering student loan counseling services, it’s easy to feel tempted to pay for their expertise.

However, you don’t need to pay for student loan counseling. In fact, we’ll give you five important reasons why you should think twice before shelling out your hard-earned money for these services.

Understanding Student Loan Counseling

Before we dive into the reasons why you don’t need to pay for student loan counseling, let’s first understand what it entails. You may find some relevant information below.

What Is Student Loan Counseling?

Student loan counseling provides guidance on managing student debt, covering topics like repayment plans, loan consolidation, and understanding loan complexities. In these sessions, experts well-versed in student loans offer tailored advice based on your financial situation. Discussions may cover income-driven repayment plans, loan forgiveness programs, and ways to minimize interest. If you have multiple loans, these counselors can advise on consolidation benefits and assist in the application process.

The Role of Student Loan Counseling Services

Student loan counseling services offer guidance on loan decisions with personalized advice. While appealing, it’s crucial to weigh their benefits against costs. These services provide clear explanations of complex loan concepts, ensuring informed decisions. They also offer support in managing loan paperwork, preventing delays or errors that could affect your loan status.

Student Loan Counselors and Payment Plans

Student loan counselors can recommend repayment plans tailored to your financial situation by analyzing your income and expenses. While some counseling services have fees, free options are available through nonprofits, government agencies, and educational institutions. The choice to use counseling is personal, but remember, both paid and free resources can guide you through student loan repayment complexities.

The Dark Side of Student Loan Counseling Services

Student loan counseling services may also come with some drawbacks you need to be careful about. Here are some things you should consider.

The Prevalence of Scams in Student Loan Counseling

One of the main concerns when it comes to paid student loan counseling services is the prevalence of scams. Unfortunately, there are dishonest companies out there that prey on vulnerable borrowers. They promise quick fixes and guaranteed results, only to disappear with your money and leave you in an even worse financial situation.

Identifying Fraudulent Student Loan Counseling Services

It can be challenging to differentiate legitimate student loan counseling services from scams. Fraudulent companies often use persuasive marketing tactics to trick borrowers into thinking they’re reputable. However, with a little bit of research and due diligence, you can avoid falling victim to these scams.

Guide to Navigating Student Loan Counseling Scams

Here’s a guide to help you distinguish genuine services from potential scams and make informed decisions about your student debt.

  1. Beware of Upfront Fees – Some debt relief companies charge for services you can achieve yourself. It’s illegal for these companies to charge phone fees before settling your loans. Instead, utilize studentaid.gov for free services or contact lenders directly. If you desire guidance, consider a certified student loan counselor, which may come at a minimal fee but provide reliable advice.
  2. Question Immediate Loan Forgiveness – Be skeptical of promises for instant loan forgiveness. While government programs like Public Service Loan Forgiveness exist, they have strict qualifications. Research potential forgiveness plans and use official tools like the Federal Student Aid’s Repayment Estimator to explore options.
  3. Avoid Sales Pressure – Don’t be rushed by salespeople into hasty decisions. Remember, legitimate loan programs aren’t short-term offers. If in doubt about a company’s legitimacy, research further and ask probing questions.
  4. Guard Your Personal Information – Never share sensitive details like Federal Student Aid IDs or Social Security numbers. Also, avoid signing power of attorney agreements which could limit your account access. If compromised, contact your loan servicer immediately.
  5. Be Wary of Online Advertisements – Companies paying for online advertisements may be profit-driven, potentially misleading you into unnecessary services. Beware of sharing information with online forms, as they might sell your data.

Reporting Suspicious Activity

If you suspect a scam, report it to agencies like the CFPB, the Federal Trade Commission, and your state attorney general’s office. Remember, while navigating student loans can be intricate, having the right information prevents falling for scams. As a rule of thumb: if an offer seems too good to be true, it probably is.

Free Online Resources for Student Loan Advice

When getting student loan advice, you need to seek it from a reputable source. Here are some tips to help you make sure you are not scammed.

The Value of Expert Advice Online

Now, let’s talk about the wealth of expert advice that is available for free online. The Internet is a treasure trove of information, and you’ll be surprised at the high-quality resources available at your fingertips. From reputable financial experts to government websites, there are countless sources that provide guidance on managing student loan debt.

Reliable Sources for Free Student Loan Advice

When it comes to finding reliable sources for free student loan advice, consider trusted financial websites, government agencies, and educational institutions. These sources typically provide comprehensive information on loan repayment options, forgiveness programs, and other related topics. You can also join online communities and forums where borrowers share their experiences and offer support.

Utilizing Free Student Loan Calculators

As a student, you’ll eventually start making payments back on your student loans. If you want to keep these expenses under control, then you can use various free calculators that can offer you an average.

How Student Loan Calculators Work

Understanding your student loan debt is crucial for developing an effective repayment strategy. This is where free student loan calculators come in handy. These online tools allow you to input your loan details, such as interest rates and loan terms, and calculate your monthly payments, total repayment amounts, and even potential savings from various repayment plans.

Benefits of Using a Student Loan Calculator

By utilizing a student loan calculator, you can gain valuable insights into your repayment options. It helps you understand the impact of different payment plans and make informed decisions based on your financial situation. With this knowledge, you can develop a repayment plan that suits your needs and saves you money in the long run.

Consolidating Your Debts with Free Tools

Debt consolidation can be a very efficient way of putting your finances in order. Done correctly, it can help lower your payments while making them easy to track.

The Importance of Debt Consolidation

If you have multiple student loans, keeping track of them can be a hassle. Fortunately, there are free tools available that can help you consolidate your debts in one place. Debt consolidation simplifies your repayment process by combining multiple loans into a single one. This can potentially lower your interest rate, making it easier to manage your debt.

Free Tools for Debt Collection and Management

In addition to debt consolidation tools, there are free resources that can aid you in managing your student loan debt effectively. These tools can help you track your payments, set reminders for due dates, and monitor your progress towards repayment. By utilizing these resources, you can stay organized and make sure you’re on top of your student loan obligations.

Finally, it’s worth mentioning that your student loan servicer should be your first point of contact for any questions or concerns related to your loans. They are there to assist you and provide guidance on various repayment options. Take advantage of their services before considering paid student loan counseling.

Best Personal Loans for Student Loan Debt Consolidation

Consolidating student loan debt through a personal loan can be a strategic move for some borrowers, sidestepping the traditional student loan counseling process. Personal loans can offer flexibility in repayment terms and might provide a fresh perspective on managing accumulated student debt. Let’s delve into some top lenders who could help with this approach.

AmOne (Best for Okay to Good Credit)

For those with reasonable to commendable credit, AmOne can be a pivotal resource. Their strength lies in connecting borrowers with a range of lenders that suit their specific financial scenarios. By opting for a personal loan through AmOne, student debt holders can streamline their repayment strategies, often with competitive rates that align with their credit standing.

AmOne Personal Loan

4.5
Stilt’s lender ratings reflect the findings and opinions of our editorial staff. Our scoring methodologies consider a wide array of factors and data points for every lender, offering, and financial solution.
Min. credit score

600

Fixed APR

3.99%-35.99%

Variable APR

N/A

Overview

  • Minimum credit score: 600.
  • Fixed APR: 3.99%-35.99%.
  • Loan amounts: $1,000 to $50,000.
  • Repayment: 1 to 7 years.

Qualifications

  • Must be at least 18 years old.
  • Must be a U.S. citizen or permanent resident.
  • While there’s no specific income requirement, a consistent source of income is essential for the applicant.

Pros

  • Suitable for individuals with lower credit scores.
  • No cost for the matching service.
  • Attractive loan rates.

Cons

  • Acts as an intermediary, not a direct lender.
  • Risk of multiple contacts from prospective lenders.
  • Lack of clarity on lender details.

Spring Loans (Best for Bad Credit and No Credit)

When credit history is scant or blemished, Spring Loans offers a glimmer of hope. Recognizing that student debt and credit challenges can coexist, they provide tailored loan solutions for debt consolidation, even if your credit score isn’t stellar. Their comprehensive assessment approach ensures that borrowers are not defined solely by their credit scores but by their broader financial story.

Spring Loans Personal Loan

4.2
Stilt’s lender ratings reflect the findings and opinions of our editorial staff. Our scoring methodologies consider a wide array of factors and data points for every lender, offering, and financial solution.
Min. credit score

None

Fixed APR

27.00%

Variable APR

N/A

Overview

  • Minimum credit score: None.
  • Fixed APR: 27.00%
  • Loan amounts: $3,000.
  • Repayment: 48 months.

Qualifications

  • Demonstrate a recurrent income.
  • Minimum age prerequisite: 18 years.
  • Validate U.S. citizenship status with an SSN.
  • Provide a legitimate U.S. driver’s license or a state identity card.
  • Establish a functional bank account for incoming deposits.
  • Adhere to any specific demands by the loan provider.

Pros

  • Open to applicants with any credit background.
  • Four-year loan period aids in structured financial management.
  • The $3,000 offer addresses several short-term financial challenges.
  • Wide-reaching eligibility criteria invite a broad spectrum of applicants.
  • The focus on dependable income over job title benefits varied income sources.

Cons

  • The set 27% APR is higher than many alternatives.
  • Restriction to a $3,000 loan might not cover all financial outlays.
  • Possessing specific IDs is mandatory, sidelining some applicants.
  • A prerequisite for an ongoing bank account may limit certain users.

First Premier Lending (Best for Bad Credit)

First Premier Lending is tailored for those with credit challenges but eager to take the reins of their student loan debt. By offering personal loans specifically designed for those with a not-so-perfect credit history, they provide an opportunity to consolidate student loans under potentially more manageable terms and rates.

First Premier Lending Personal Loan

4.2
Stilt’s lender ratings reflect the findings and opinions of our editorial staff. Our scoring methodologies consider a wide array of factors and data points for every lender, offering, and financial solution.
Min. credit score

None

Fixed APR

27.00%

Variable APR

N/A

Overview

  • Minimum credit score: None.
  • Fixed APR: 27.00%.
  • Loan amounts: $3,000.
  • Repayment: 48 months.

Qualifications

  • Maintain a consistent source of income.
  • Must be at least 18 years of age.
  • Possess valid U.S. citizenship and a legitimate social security number.
  • Hold a current U.S. driver’s license or state-issued ID.
  • Keep an active bank account for direct deposit.
  • Satisfy any lender-specific criteria, such as credit rating, borrowing history, or place of residence.

Pros

  • No minimum credit score requirement allows accessibility for those with varied credit histories.
  • 48-month term provides clarity and allows for long-term financial planning.
  • Specific loan amount of $3,000 can meet many short-term financial needs.
  • Broad set of qualifications make the loan accessible to a wide range of people.
  • Emphasis on consistent income, not necessarily employment type, allows flexibility for borrowers.

Cons

  • A fixed APR of 27% is relatively high.
  • Loan amount is capped at $3,000, which might not cater to larger financial requirements.
  • Requirement of a U.S. driver’s license or state-issued ID could exclude some individuals.
  • Mandatory active bank account could be limiting for those who are unbanked.

Upgrade (Best for Good to Great Credit)

With a stellar reputation, Upgrade caters to those whose credit is already in the good to great range. Their personal loans are designed with transparency and competitive rates in mind. By consolidating student loans through Upgrade, borrowers can potentially benefit from lower interest rates and a single monthly payment, simplifying their financial landscape.

Upgrade Personal Loan

5.0
Stilt’s lender ratings reflect the findings and opinions of our editorial staff. Our scoring methodologies consider a wide array of factors and data points for every lender, offering, and financial solution.
Min. credit score

560

Fixed APR

8.49% - 35.99%

Variable APR

N/A

Overview

  • Minimum credit score: 560
  • Fixed APR: 8.49% – 35.99%
  • Loan amounts: $1,000 to $50,000
  • Repayment: 3 to 5 years (7 years on some larger loans)

Qualifications

  • Possess an active bank account.
  • Able to provide a legitimate email address.
  • Minimum age requirement: 18 years (19 for Alabama residents).
  • Credit score of 600 or higher.
  • Annual income of $25,000 or more.

Pros

  • Willing to accommodate borrowers with a credit score as low as 560.
  • Offers flexibility with a range of loan amounts from $1,000 to $50,000. This can be suitable for both small and large financial needs.
  • Provides options for repayment, allowing borrowers to choose a timeline that best suits their financial situation.
  • Once approved, borrowers can access funds in just one day, which is useful for urgent financial needs.

Cons

  • Origination fees can go as high as 9.99%, which might add a significant cost to the loan.
  • Apart from the origination fee, there are fees for late payments and failed payments, which can add up if one is not careful.
  • While there is an option to extend repayment for larger loans up to 7 years, it’s not standard for all loan amounts.

BestEgg (Best for Good Credit)

For individuals with good credit looking to bring together scattered student debts under one umbrella, BestEgg is a noteworthy choice. Their streamlined application process and prompt approval times mean borrowers can quickly tackle their student loans, consolidating them into a single personal loan with terms tailored to their credit profile.

BestEgg Personal Loan

4.5
Stilt’s lender ratings reflect the findings and opinions of our editorial staff. Our scoring methodologies consider a wide array of factors and data points for every lender, offering, and financial solution.
Min. credit score

600

Fixed APR

8.99-35.99%

Variable APR

N/A

Overview

  • Minimum credit score: 600.
  • Fixed APR: 8.99-35.99%.
  • Loan amounts: $2,000-$50,000.
  • Repayment: 3 to 5 years.

Qualifications

  • Targets borrowers with good to excellent credit; fair credit may qualify.
  • Minimum credit score of 600.
  • At least two years of credit history.
  • Minimum annual income: $3,500 from various sources like employment, alimony, and more.
  • Debt-to-income ratio: 40%, or 65% when including a mortgage.
  • Must be a U.S. citizen.

Pros

  • Soft credit check available for pre-qualification.
  • Offers a diverse spectrum of loan amounts.
  • Provides options for secured loans.
  • Direct payments can be made to creditors for debt consolidation.
  • Late fees are not charged.

Cons

  • Charges an origination fee.
  • Doesn’t offer rate discounts.
  • Initial payment date isn’t customizable.
  • Lacks a dedicated mobile app for loan management.

Read More

Final Thoughts

Paying for student loan counseling services is unnecessary when there are numerous free resources available to help you navigate the complexities of student loans. From expert advice online and free student loan calculators to tools for debt consolidation and management, you can take control of your student loan debt without breaking the bank. Remember, knowledge is power, and by utilizing these resources, you can make informed decisions and achieve financial freedom.

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Frank Gogol

I’m a firm believer that information is the key to financial freedom. On the Stilt Blog, I write about the complex topics — like finance, immigration, and technology — to help immigrants make the most of their lives in the U.S. Our content and brand have been featured in Forbes, TechCrunch, VentureBeat, and more.