EMERYVILLE, Calif., Feb. 2, 2018 /PRNewswire/ — The student debt landscape is filled with competing explanations about why debt levels are so high. To cover increasing tuition costs, students must borrow more and more money. But some say the abundance of federal loans is actually the culprit behind rising tuition, not the solution to it. Meanwhile, others wonder if rising student debt is even a crisis at all. While experts continue to analyze the situation and work on improving it for future borrowers, current borrowers who are struggling with student debt may need some help managing it. American Financial Benefits Center (AFBC), a private document preparation company specializing in document preparation for federal student loan repayment programs, reminds borrowers that income-driven repayment plans offered by the Department of Education may lower monthly payments.
Thanks to all the reports on student debt being published lately, it’s easy to outline what the modern student loan borrower looks like and who is struggling the most. While graduate students accumulate more debt than undergraduates, borrowers with less debt who did not complete a degree program default at a higher rate. Furthermore, debt levels may not be the most crucial factor when predicting default rates; instead, individual circumstances, like the school attended or family financial situation, can be more telling.
“Every borrower has a unique financial situation that may benefit from federal income-driven repayment programs,” said Sara Molina, Manager at AFBC. “At AFBC, we’ve seen the impact those programs can have on individuals’ monthly budgets and encourage any federal student loan borrower struggling with payments to look into them.”
All student loan borrowers begin repayment in the Standard repayment plan unless they specify otherwise. That plan bases payment amounts on a 10-year repayment schedule. For many borrowers, that payment amount can be too high, especially at the beginning of a career. Income-driven repayment plans (IDRs) are calculated differently, and therefore can provide borrowers relief in their monthly budget.
Because IDRs are calculated at a percentage of discretionary income, which takes income and family size into consideration, borrowers with low income, a big family size, or a high student loan balance might benefit from enrolling in an IDR. However, there are several income-driven repayment options that work with different situations, so any borrower who feels stressed about not making the monthly loan payment should look into the available repayment options.
“No matter what may be causing student loan debt to increase, borrowers