Dropping Out of College to Minimize Debt May Hurt Instead of Help Borrowers Financially, Says Ameritech Financial

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May 29, 2018, 08:00 ET

ROHNERT PARK, Calif., May 29, 2018 /PRNewswire/ -- As student loan balances increase, college students are considering dropping out of school before earning a degree. While the reasons to do so can vary, completing a degree program despite potential difficulties is typically in the borrower's best interest. Ameritech Financial, a document preparation company that assists student loan borrowers with federal repayment plan applications, reminds students that if their student loan payments are too high relative to their income and family size that they may be well-suited for federal income-driven repayment plans.

Decision to Drop Out or Stay at College and Take On More Debt | Credit: PathDoc/Bigstock

"I'm afraid that students are losing sight of the financial benefits of a college education because of their student loans," said Tom Knickerbocker, executive vice president of Ameritech Financial. "Higher education is supposed to increase earning potentials, but dropping out is counterproductive."

A recent survey showed that about 40 percent of college students have considered dropping out to avoid taking on more debt. Such a decision represents a balancing act between funds needed now and income later. While watching that debt amount increase each year can be alarming, students should remember that having a high balance does not necessarily mean that they will have trouble paying down those loans.

Data has shown that borrowers with high balances are more likely to be in good standing on their student loans, while borrowers who did not complete a degree program are more likely than most to default. The higher earning potential associated with a college degree is typically enough to cover monthly payments, but borrowers with low starting salaries or who may be underemployed may be able to stay current on their loans through enrollment in a federal income-driven repayment plan (IDR).

IDRs calculate payments on income and family size and can end in forgiveness after 20 to 25 years of enrollment. Borrowers may see reduced payments, which can allow them to reduce their financial stress and focus on other financial goals. Ameritech Financial is a private company that helps borrowers understand and apply for such plans.

"Watching loan balances increase during school can be very stressful, but dropping out just to stop that debt might not be wise," said Knickerbocker. "Borrowers who complete school are usually more able to make those payments, but those who still struggle might benefit from an IDR. At Ameritech Financial, we help identify those borrowers and help with application paperwork."

About Ameritech Financial

Ameritech Financial is a private company located in Rohnert Park, California. Ameritech Financial has already helped thousands of consumers with financial analysis and student loan document preparation to apply for federal student loan repayment programs offered through the Department of Education.

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

Ameritech Financial prides itself on its exceptional customer service.

Ameritech Financial Newsroom

Contact

To learn more about Ameritech Financial, please contact:

Ameritech Financial
5789 State Farm Drive #265
Rohnert Park, CA 94928
1-800-792-8621
[email protected]

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Decision to Drop Out or Stay at College and Take On More Debt
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SOURCE Ameritech Financial