American Financial Benefits Center Reminds Borrowers of Repayment Differences Between Private and Federal Student Loans

EMERYVILLE, Calif., April 4, 2018 /PRNewswire/ -- There are many ways to fund a college education and they are not equal. Students may be eligible for need-based or merit-based financial aid provided federally or by their institution of choice. Or they may rely on loans — federal or private or both — to fund their education. American Financial Benefits Center (AFBC), a document preparation company that helps its clients apply for enrollment and recertification in federal repayment plans, reminds borrowers that all student loans must be paid back, but federal loans typically have more flexible repayment options.

"General advice for students borrowing for college is to take subsidized federal loans before unsubsidized loans, and then private loans as a last resort," said Sara Molina, manager at AFBC. "Federal student loans are more common to have, which is good because the repayment options can be much more suited to each borrower's needs."

To access federal student aid, students must fill out the FAFSA. Based on the information that they provide, students may receive any combination of scholarships, grants, work-study and federal student loans. Those federal loans come with "borrower protections," which simply means the Department of Education offers a variety of options for dealing with the debt if borrowers find repayment difficult. For example, borrowers who lose their job and expect to start a new job soon may enter into deferment or forbearance in the interim.

Borrowers who need a long-term solution to being unable to afford their federal student loan payments have access to various repayment plans, including a variety of income-driven repayment plans (IDRs) that base payments on income and family size. Such plans can calculate payments as low as zero dollars for certain borrowers and may end in forgiveness after 20 to 25 years in the program.

Private student loans are not eligible for such repayment plan options. Instead, they are at the mercy of their lender. And while some may offer forbearance for borrowers experiencing economic hardship, it is not required that private lenders offer such options. Private student loan borrowers who have been successful at repayment but who desire lower payments may be able to refinance for a lower interest rate.

Federal student loan borrowers may choose to refinance their student loans, but they will lose access to the aforementioned borrower protections. Many borrowers find IDRs valuable in staying current on their loans. Those planning on Public Service Loan Forgiveness, for example, must stay in an IDR for the duration of the 120 required payments while working for an eligible employer. Private loans are not eligible for PSLF or other forgiveness programs.

"Students who need both private and federal loans to get through college should be aware of the repayment options," said Molina. "At AFBC, our clients who are in IDRs may be able to stay current on their federal loans as well as other debt or private loans they are responsible for paying each month."

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.

AFBC is a member of the Association for Student Loan Relief (AFSLR), and each representative on the phone 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]

Related Links

AFBC home page

SOURCE American Financial Benefits Center

Related Links

https://afbcenter.com