10 Questions for … a Student Loan Consultant
Ever since he was a kid, John Smith knew that his calling was in medicine. But while Smith didn’t have to struggle with the ubiquitous “What am I going to do with the rest of my life?” question, the newly minted M.D. has struggled to pay off his high-interest-rate student loans.
The problem? Although Smith never missed a payment on his student loans, he was frequently unable to make the entire monthly minimum payment. And whenever he asked his lender to consider renegotiating that amount, the answer was no—and the lender eventually turned his account over to a collections agency that began making threatening calls to his dad, who’d co-signed the loans.
If his student loans had been issued by the federal government, Smith would have had the option to make affordable, income-based payments until he finished his training and his salary increased. Unfortunately, his loans were issued by private lenders, and they rarely agree to reduced payments—even temporarily.
Heather Jarvis knows these stories all too well. The North Carolina–based attorney and student-loan consultant has spent the last ten years advocating for—and educating—student borrowers. And given that interest rates on federal Stafford loans doubled to 6.8% on July 1, there’s likely be a lot more advocating and educating in her future. We sat down with Jarvis to learn more about student loan consultants—a profession that’s, not surprisingly, in high demand.
LearnVest: First thing’s first … What exactly is a student loan consultant?
Heather Jarvis: As many of us know, the earlier that students and families start to think about how to manage college costs, the better, but my focus is to help people figure out how to deal with the student loans they have already accumulated. I do this by, among other things, educating universities, associations and professional advisors about student-loan repayment and forgiveness programs.
Although my focus is on training student loan officers, student loan consultants work one-on-one with borrowers to create customized repayment plans. Their advice and advocacy can be valuable, but I encourage people to carefully evaluate their options before hiring someone. There are an increasing number of businesses that are preying on borrowers’ anxieties and fears by charging them for so-called “special” programs that are actually open to everyone. So be sure to ask questions about a consultant’s education, experience and compensation—as well as investigating their track record with the Better Business Bureau.
How does a student loan consultant differ from a student loan officer who works for a college?
For one, advisors who are independent of a particular university are more likely to point out the importance of considering cost when choosing a school. Also, compared to a student loan consultant, university-employed financial-aid professionals are busy administering the financial-aid programs (including student loans) that people will use to cover their educational expenses, so they’re not typically as focused on helping students or graduates deal with how they’ll repay those loans once they finish school.
Private vs. federal loans: What’s better for the typical borrower?
Definitely federal. Private student loans [those issued by private banks or lending institutions] are typically more expensive and risky for student-loan borrowers because they lack the borrower protections and flexible repayment provisions of federal student loans. And although some borrowers with excellent credit might find private loans with lower interest rates, those rates are often variable and are almost certain to go up over time—sometimes without any cap. Additionally, the most generous debt-relief programs, like income-based repayment and public-service loan forgiveness, are only available to recipients of federal student loans.