American Financial Benefits Center Encourages Borrowers With Any Balance to Act Before They Default

EMERYVILLE, Calif., May 7, 2018 /PRNewswire/ -- A lot of attention is placed on high student loan balances. However, it turns out that the smaller balances are more likely to default than the larger ones. Other factors contribute to default rates, but borrowers should focus on their own loans and personal likelihood of falling behind on payments. American Financial Benefits Center (AFBC), a document preparation company, encourages borrowers to look into federal repayment plan options when they need support in staying current on their loans.

"Defaulting is one of the worst things you can do with your student loans," said Sara Molina, manager at AFBC. "Instead of focusing on statistics about defaulting, borrowers should examine their own situation and take action if they feel they might default in the future."

A borrower will default after failing to make a payment in 270 days, or about nine months. At that point, student loans get sent to a collection agency and borrowers become ineligible for federal repayment plans. Defaulted borrowers may have their wages garnished and tax refund offset. There is also a negative impact on their credit score.

There are only two ways to get out of default without paying down the entire balance, and they may only be available once, so borrowers should do what they can to avoid defaulting. Borrowers who are at risk of defaulting may choose to look into federal repayment plans. Those with smaller balances may have fewer options; the Extended plan, which lowers payments by extending the life of the loan, is only available for borrowers with more than $30,000 in loans.

Income-driven repayment plan (IDR) eligibility is based on income and family size rather than balance and can potentially reduce payments. The various plans feature a 20- or 25-year term with possible loan forgiveness at the end. Borrowers with zero income may have a payment of zero dollars, making it possible to avoid default while being unable to make payments.

"Federal repayment plans are intended to help borrowers afford their payments so that they can continue to make those payments," said Molina. "At AFBC, we helped our clients with IDR applications in an effort to get borrowers to a place where they can better afford their loans. And every year we help with recertification for continued enrollment."

About American Financial Benefits Center

American Financial Benefits Center is a document preparation company that helps clients apply for federal student loan repayment plans that fit their personal financial and student loan situation. Through its strict customer service guidelines, the company strives for the highest levels of honesty and integrity.

Each AFBC telephone representative has received the Certified Student Loan Professional certification through the International Association of Professional Debt Arbitrators (IAPDA).

Contact

To learn more about American Financial Benefits Center, please contact:

American Financial Benefits Center
1900 Powell Street #600
Emeryville, CA 94608
1-800-488-1490
[email protected]

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Student Loan Default
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Related Links

AFBC home page

SOURCE American Financial Benefits Center