Ameritech Financial Responds to Increase in Federal Student Loan Interest Rates
EL DORADO HILLS, Calif., May 17, 2017 /PRNewswire/ -- Following the annual Treasury Department 10-year note auction that occurred May 10, interest rates for federal student loans are set to increase July 1 for the 2017–2018 school year. Ameritech Financial, the industry-leading document preparation company that helps borrowers enroll in Department of Education income-based repayment programs, sets out to reiterate their commitment to assist borrowers in taking advantage of affordable repayment plans, no matter how high the federal student loan interest rates soar.
Student loan interest rates are based on the annual Treasury Department auction. Specifically, they are calculated by taking the yield amount for a 10-year Treasury note and adding a set percent amount for each type of loan. For example, the add-on percentage for undergraduate loans is 2.05 percent. This year the Treasury note yield was 2.4 percent, making the undergraduate federal student loan interest rate for the 2017–2018 school year 4.45 percent.
"Even though federal interest rates for student loans have been low in recent years, we hear a lot of complaints about how total loan amounts grow out of control from interest being tacked on year after year," says Tom Knickerbocker, Executive Vice President of Ameritech Financial. "We agree with our clients that raising interest rates is not the right move when student loan debt is already spiraling out of control. With so many defaults each year, even small increases can result in even larger unforeseen problems for borrowers."
For many prospective borrowers, it's scary to see interest rates increase while the national student loan debt amount also grows. But how much will the new interest rate really affect payments? A student taking on $5,000 with the new interest rate will expect to pay $196 more in interest than a student taking the same amount of debt on the current interest rate. That's over the life of the loan, assuming the student pays off the loan in the standard 10-year period.
For many, that isn't a big change (less than $2 added to monthly payments). But for others who see so many borrowers unable to make current payments, any change is too much. It can become catastrophic if the borrower has to enter into forbearance for an extended period of time and watch their total loan amount increase because of accruing interest.
Furthermore, the Congressional Budget Office projects rates to top 6 percent for undergraduate loans by 2018. The trend toward even higher interest rates may make families nervous, but there is a limit. Congress set a cap for student loans so interest rates wouldn't skyrocket: undergraduate student loan interest rates cannot exceed 8.25 percent.
Despite rising interest rates, federal student loans are still the best option for borrowers because of the borrower protections they come with. The option to enroll in different payment plans that may lower monthly payments is invaluable to borrowers who can't afford standard repayment amounts.
"Our goal at Ameritech Financial is to match up each client with the repayment plan that works best for their individual financial situation," explains Knickerbocker. "So whatever direction the interest rates are going, we will work hard so our clients aren't crushed by outrageous monthly payments. It's important to us that student loans become manageable for our clients."
About Ameritech Financial
Ameritech Financial is located in El Dorado Hills, California, right next to the California state capital, Sacramento. Ameritech Financial has already helped thousands of people with financial analysis and student loan document preparation for federal student loan forgiveness programs offered through the Department of Education.
Each representative on the phone is certified through the International Association of Professional Debt Arbitrators (IAPDA) and has received the Certified Student Loan Professional certification through Americans for Student Loan Relief (AFSLR).
Ameritech Financial prides themselves on their exceptional 24/7 Customer Service.
Contact
To learn more about Ameritech Financial, please contact:
Ameritech Financial
1101 Investment Blvd., Ste. 290
El Dorado Hills, CA 95762
1-800-792-8621
[email protected]
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SOURCE Ameritech Financial
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https://ameritechfinancial.com
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