EMERYVILLE, Calif., Dec. 11, 2017 /PRNewswire/ -- Income-driven repayment plans can save federal student loan borrowers a lot of money depending on their income and family size. IDRs calculate a borrower's payment as 10 to 15 percent of discretionary income, which takes into account family size, and can end in forgiveness if any balance remains after 20 to 25 years. While those terms make IDRs the best default prevention option for many borrowers, they require yearly maintenance to stay enrolled. Therefore, it is essential that those borrowers don't miss their annual deadline. American Financial Benefits Center, a document preparation company that assists borrowers in applying for income-driven repayment plans through the Department of Education, focuses on making sure that its clients recertify on time to avoid gaps in the repayment program.
Because IDR payments are calculated based on income and family size, any change in either of those should be reflected in a borrower's payments. Therefore, borrowers must share that information with the Department of Education every year to make sure their payment amount remains accurate.
"Recertification is an essential part of the income-based repayment plan process," said Sara Molina, manager at AFBC. "A lot rides on that yearly paperwork, so it is important that borrowers stay on top of that year after year. At AFBC, we help with that."
Missing the deadline will reset a borrower's loans in the Standard repayment plan, after capitalizing all interest that had accrued. For those who have IDR payments lower than the interest that accrues daily, that one mistake could inflate the balance and put the new Standard monthly payments even more out of reach.
In order to not miss that deadline, servicers are supposed to send borrowers reminders of the upcoming deadline. However, borrowers don't always receive those reminders, putting them at risk for falling out of the IDR program. Even borrowers who don't miss the deadline and submit their paperwork on time may experience a delay in processing the paperwork that could be bad news for their loans. Though the law requires servicers to keep charging the previous year's IDR amount while they process the paperwork as long as they received it on time, some servicers either place borrowers in forbearance when the IDR year ends or reset their loans in the Standard repayment plan, even if the delay is on their end.
AFBC has some advice for borrowers who want to maximize their chances of success in the recertification process:
- Start the paperwork early. Submitting it well in advance gives the servicer plenty of time to process it.
- Fill out the paperwork correctly. To recertify, borrowers fill out the same application they had submitted the first time to enroll in the program. It is important that borrowers specify that they are submitting updated information and not a new application.
- Check on the application a month after submitting it to make sure it went through.
AFBC helps its clients with all of that, from reminders three months ahead of the deadline to preparing and submitting the documents for each client and verifying the documents were approved after submission.
"Recertifying ends up being a roadblock for a lot of borrowers when it doesn't have to be," said Molina. "We help our clients get through a confusing process so they don't have to worry about missing their deadline and going back to a life full of financial stress stemming from unmanageable student loans."
About American Financial Benefits Center
American Financial Benefits Center is a document preparation company that helps clients apply for the federal repayment plan that fits their personal financial and student loan situation. They adhere to strict customer service guidelines and strive 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).
To learn more about American Financial Benefits Center, please contact:
American Financial Benefits Center
1900 Powell Street #600
Emeryville, CA 94608
SOURCE American Financial Benefits Center