Student Loan Alliance put out a press release earlier this week talking about the training they were giving credit counseling agencies in order to deal with student loan problems.
Student Loan Alliance says the credit counseling agencies that participate in their approach and training are The participating organizations are: Consumer Credit Counseling Service of Greater Dallas, Consumer Credit Counseling Service of San Francisco, Clearpoint Credit Counseling Solutions, Inc., CredAbility, GreenPath, Inc., Money Management International, Inc., Novadebt, Springboard Nonprofit Consumer Credit Management, Inc., and Take Charge America, Inc.
SLA said, ““By providing all counselors with standardized training protocols, the SLA aims to ensure that all consumers who request counseling at StudentLoanHelp.org receive the same quality level of service,” said Larry Gilmore, President of the SLA. In order to measure a counselor’s understanding of student loan repayment options, the SLA also administers an exam for counselors to take upon completion of training.
In addition to the student loan training provided by the SLA, these counselors have a vast knowledge of other types of consumer debt and experience in counseling individuals with diverse financial concerns, from homeowners facing foreclosure to borrowers who cannot afford their credit card payments. – Source
After reading the press release I was keenly interested in what role bankruptcy would play in the advice given and training provided by SLA. Days ago i reached out to SLA for comment but as of this publication I have not received a response.
In the past I’ve been critical of credit counseling when the groups do not provide sufficient guidance to consumers about the long term consequences of repayment plans in the absence of being able to save for emergencies and the future. So I was very interested to see if credit counselors would mention the benefits of bankruptcy in dealing with student loans.
It is my observation that most looking to provide student loan assistance help overlook the advantage of filing bankruptcy to discharge other unsecured debt so the consumer can get back on the regular 10 year payment plan to avoid future tax liabilities and a costly protracted repayment plan.
From a review of the StudentLoanHelp.org website it appears bankruptcy is not even listed as a solution when dealing with student loans.
Even completing the online guide they have and stating there are other financial issues involved and checking the unemployed box did not produce bankruptcy as a recommendation.
And then the recommendation page, beside not suggesting bankruptcy, even says a debt management plan is an option to avoid bankruptcy. – Source
Hey, I’m all about consumers getting good advice to best deal with their debt but it appears Student Loan Alliance and maybe even their participating credit counseling agencies are not being exactly all that open about all the solutions available.
For more on student loan assistance strategies, including bankruptcy, see The Ultimate Guide to Dealing With Student Loans You Can’t Afford.
I would hate to be a cynic about why bankruptcy isn’t a first tier tool to deal with financial problems related to student loans by these entities. Some might say it is because the credit counseling groups don’t want to rock the boat with the creditors and irritate them by suggesting bankruptcy when someone can make a debt management plan payment.
It might also just be the credit counseling groups are not all that educated about the benefits of bankruptcy for student loans and how it can result in a total discharge of the debt or even 0% APR payment plans for a much lower balance. For a recent study on this see How to Really Discharge Your Student Loans in Bankruptcy. Many Can. But Never Try.