After you read that little story, you may be wondering with whom you should talk about your loans.
You may have friends from high school or college who are financial advisors who would love to lend you a hand. But even most well-meaning financial folks are not fully versed in the nuances of student loans, and sadly many more financial folks aren’t particularly well-meaning. Many financial professionals are more salesman than advisor, so before you pay anyone for anything, you need to be certain how they make their money. If they’re trying to sell you insurance or manage your investment accounts, be wary some serious conflicts of interest. Likewise, many student loan “professionals” have negotiated arrangements with student loan companies and get paid commissions on refinanced loans (another COI). You’ll generally be safer with a “fee-only” (not just “fee-based”) financial advisor, to whom you pay either a flat fee or hourly rate. You also only want one who will act as a “fiduciary,” which means they’re bound to act in your best interest. Even then, hiring a professional doesn’t obviate the need to do your own due diligence.
If someone mentions the words whole life insurance or annuity or wants to actively manage your investments—run, don’t walk. First, you don’t need someone to manage your assets when you don’t have any. And, more importantly, people operating via commission or assets under management who are willing to see you for free or on the cheap in order to establish a relationship with you are not being charitable. Even if you get a free steak dinner, don’t ever think you owe anyone anything. This is a marketing expense for them, not a favor to you. Free student loan advice is often worth less than nothing.
The people who on the face of it may seem to be best-suited to help you are those with the new “certified student loan professional” designation. Sounds legit, right? I used to mock the CSLA organization mercilessly in previous versions of this book because its initial addition to the alphabet soup of mostly dubious professional financial accreditations is achieved by taking an online video course and passing a 90-question multiple-choice test. Whew, serious stuff. The website (cslainstitute.org) also used to misspell the REPAYE program as “Repay.” That said, at least the course content has tightened up to something more meaningful over the years. I might trust a financial planner with the CSLP certification more than one without, but you still need to make sure they can walk the walk, and you can’t do that if you can’t follow the logic.
Any person you pay to help you is going to plug your numbers into a glorified (or actual) Excel spreadsheet. Not only is this something you can do yourself, but any Excel spreadsheet or online calculator is only as useful as its assumptions and inputs, and none meaningfully represents all of your true options.
You may not be a finance buff, but if you’ve borrowed money to pay for higher education, then I think you’re smart enough to learn what you need to know. Many of you have (or will soon have) a doctorate!
In all seriousness, while I believe you can do this yourself, there are definitely people who have complicated situations and would benefit from professional help. You should at least learn enough that you can understand the why of what a professional advises. Don’t just take things at face value.