EL DORADO HILLS, Calif., June 12, 2017 /PRNewswire/ -- Trump's proposed budget contains many changes to federal student loans, and people can't seem to agree how it will actually affect students. What they can agree on is that student loan debt is a major problem and action is needed. Ameritech Financial, a document preparation company that helps borrowers enroll in income-based repayment programs through the Department of Education, is prepared for the proposed changes and will continue to work in the best interest of their clients.
Trump's budget does a few things to the federal student loan industry: eliminates subsidized loans, restructures income-based repayment (IBR) plans and eliminates the Public Service Loan Forgiveness program. On the surface, it may appear that these changes are not in the best interest of low-income borrowers — for example, eliminating subsidized loans results in higher loan balances at the beginning of repayment and potentially much more paid overall — but AEI, a think tank, took a closer look and argues that the changes will help low-income borrowers the most.
"Any change to federal student loans can mean a lot of stress for borrowers as everyone tries to figure out what they mean," said Tom Knickerbocker, Executive Vice President of Ameritech Financial. "We're also eager to see how changes like these will pan out, but no matter what, our values won't change. We'll always be here to help our clients."
Subsidized loans are a type of federal student loan in which the government pays the interest while the student is in school. This results in an expected loan balance when repayment begins. Unsubsidized loans accrue interest while the student is in school. Though students are never expected to make any payments on federal student loans while in school, that interest is added to the loan principal when repayment begins, which results in a higher loan balance.
The switch to all unsubsidized loans sounds bad initially, but when you look closer it might not be that bad. During a 4-year degree program, if a student takes out maximum loans, they only add $2,400 to the balance. While that's enough to make many people pause, when combined with the new proposed income-based repayment plan changes, borrowers with an undergraduate degree pay less than they would on the current system.
The new budget proposes major changes to the repayment plans available through the Department of Education. It combines the five different plans into a single income-based repayment plan that provides loan forgiveness after 15 years, down from 20 in the current system, to borrowers with an undergraduate degree. The extra five years of loan payment forgiveness more than covers the added amount of unsubsidized interest as well as the increase in payments from 10 percent to 12.5 percent of income.
Trump's budget proposal makes great efforts to simplify and streamline federal student loans. After so many complaints about broken or overly complicated processes for enrolling in repayment and forgiveness programs, AEI argues that simplification may be the answer.
"We don't know how the changes will affect borrowers, but we continue to stay informed and prepare for any changes that may come into effect," said Knickerbocker. "At Ameritech Financial, our mission is to help borrowers enroll in the Department of Education repayment plan that works for them. We do our best to help them maximize their savings using the federal programs available, no matter what changes."
About Ameritech Financial
Ameritech Financial is located in El Dorado Hills, California, right next to the California state capitol, 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 Association for Student Loan Relief (AFSLR).
Ameritech Financial prides themselves on their exceptional 24/7 Customer Service.
To learn more about Ameritech Financial, please contact:
1101 Investment Blvd Ste. 290
El Dorado Hills, CA 95762
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/ameritech-financial-keeping-an-open-mind-about-trump-budget-proposal-300472732.html
SOURCE Ameritech Financial