Reportedly, around 22% of students have turned to AI-driven tools like ChatGPT, Gemini, and Copilot for help navigating the labyrinthine process of college applications and selection.
But when it comes to drowning in education debt, should borrowers stick their necks out and place faith in these digital advisors? Speaking from a human perspective, my verdict is a cautious no.
Trusting a large language model (LLM) without reservation is ill-advised. Like us mere mortals, these digital entities can—and do—slip up.
Four Pitfalls of Letting AI Dictate Your Repayment Plan
For more than ten years, some lenders have harnessed machine learning, a branch of AI, to assist with underwriting and other tasks. In fact, an April survey revealed that 75% of banks are dabbling in Generative AI. Still, due to stringent regulatory hoops and the delicate nature of credit assessments, financial institutions invest heavily in refining their algorithms before launching them publicly.
In plain English, banks undergo a far more intricate dance than just typing in some queries on ChatGPT, which is exactly what I recently put to the test.
Inside My Experiment with ChatGPT
Feeding ChatGPT 4 a basket of details about two hypothetical borrowers—Kermit and Miss Piggy—I included their professions, outstanding debt, and progress toward loan forgiveness. Then, I fired off a series of queries to see if the AI’s advice aligned with what my student loan counseling background would recommend.
1. AI Won’t Always Catch Your Mistakes
I occasionally fed the AI questions peppered with deliberate errors, curious whether it might correct me on the fly. Given that an average borrower is prone to blind spots and occasional misinformation, this seemed like a fair test.
- AI’s Miss: Upon being informed that the hypothetical borrower qualified for SAVE, the AI blindly accepted this without flagging its improbability or feasibility. Spoiler alert: that wasn’t accurate.
- Why It’s Critical: When your own understanding falters, you naturally lean on external advice. But if your misconceptions are handed off to an LLM, it might double down on the wrong info, steering you ever further astray.
2. AI May Lag Behind on Recent Policy Tweaks
ChatGPT isn’t immune to falling behind the curve.
- Where AI Stumbled: It missed that, starting July 1, 2028, borrowers will be restricted to choosing from just three repayment options.
- The Stakes: Dispensing outdated guidance can stall your progress or, worse, nudge you down a rabbit hole of ineffective strategies.
Understanding the Shifting Landscape of Federal Student Loan Repayments
The sweeping provisions of the Big Beautiful Bill are set to upend repayment frameworks for millions of borrowers nationwide.
According to recent statistics, approximately 45 million Americans collectively owe over $1.7 trillion in student loan debt, underscoring the immense impact of evolving loan policies.
3. AI Tends to Offer Simplistic Final Answers Over Nuanced Guidance
For borrowers sitting across from me, I gather a mosaic of details—from federal and private debt balances to intimate facts like family size, tax filing status, and career aspirations. Without such depth, confidently recommending the optimal repayment route is an uphill battle.
- AI’s Flaw: While ChatGPT does attempt to show its reasoning, its design biases it toward producing neat, definitive answers—even when crucial context is missing.
- Why This Matters: If the AI nudges you towards a specific step (like selecting a particular repayment plan), you might overlook alternative paths such as federal forgiveness programs.
4. AI Lacks the Emotional Intelligence to Support You
Dealing with debt often has a ticking clock. The pressure is palpable when a missed payment looms or worse, default. Borrowers crave empathy from their counselors—something a faceless algorithm is fundamentally unequipped to provide.
- Where AI Falls Short: Artificial intelligence is inherently devoid of genuine empathy or concern.
- The Consequence: Human advisors can be held accountable for their guidance; AI, on the other hand, leaves you with no one to answer to if it steers you wrong.
AI Recognizes Its Own Limits
Far from cocky, this language model openly acknowledges the gaps in its capabilities—something that earns it a respectful nod.
It confirmed many points I’d already suspected. (I personally use LLMs as tools to vet my advice, not to replace it.) Specifically, ChatGPT admitted:
- It can’t tap into a borrower’s full National Student Loan Data System profile, relying solely on whatever info users supply.
- It doesn’t always mirror the freshest policy updates, occasionally handing out stale or invalid options.
- It struggles to tailor responses to personal emotions, risk appetites, and life priorities, making it tough to humanize complex trade-offs.
- It cannot perform actions on your behalf, like submitting employer certification forms.
In reality, LLMs still might not outshine popular social media “influencers” who offer student loan tips.
So, Is AI Worth Using for Student Loan Advice?
The real question isn’t which AI yields the sharpest advice, but whether it’s worth using in the first place. My take? Yes, but with caveats.
AI’s ubiquity and utility have become woven into the fabric of our daily lives. For example, The Chronicle of Higher Education reports many students employ AI for everything from drafting essays to managing mental health struggles.
It’s a handy sidekick — not your one-stop financial oracle.
Where Else to Turn for Student Loan Wisdom?
A simple hint: Tap into human expertise.
The Human Factor
Professional advisors and attorneys charging consultation fees remain invaluable, though even human guidance isn’t infallible. It pays to explore multiple sources and maintain a healthy dose of skepticism. Fact-check your key takeaways before committing to any repayment plan, whether you’re a recent graduate or deep into repayment.
Truth be told, hunting down the “perfect” answer takes effort and patience.
For those who prefer to connect with a real person who truly cares, feel free to reach out to the article’s author via email at [email protected].