EMERYVILLE, Calif., March 28, 2018 /PRNewswire/ -- To cover the cost of college, millions of Americans take out student loans, whether they are funding their education or that of their children. That money must be used for educational purposes, but even if it isn't, it must be paid back. Though college students are getting over the reputation for using student loans to fund spring break trips, new uses of loan money are coming to light. American Financial Benefits Center (AFBC), a document preparation company that helps its clients apply for and remain enrolled in federal repayment plans reminds borrowers that once they sign the promissory note, they are responsible for paying back those loans.
"It's important for students to fully grasp the consequences of taking on debt to fund higher education," said Sara Molina, Manager at AFBC. "Having limited income, such as when students must rely on loans for living expenses, can offer valuable lessons on managing money."
A recent advice column addressed a situation where a student's mother, who was managing the student's finances, used $12,000 of her child's student loans on personal purchases. While that is an unfortunate circumstance, it highlights the importance of tracking one's own money, especially if they are responsible for paying it back later. And while that borrower may try to work out a strategy to have the mother help pay down the debt to cover those expenses, it is up to the borrower to make those payments.
Taking out student loans is a big responsibility, and some borrowers may feel it is unfair for them to pay back loans, especially if they did not end up with a high-paying job or even get a degree. Some may be confused about who is responsible for repaying loans. Specifically, while some students promise to pay down loans that their parents took out for their education, it is ultimately up to the borrower who signed the promissory note to pay down those loans. For federal parent PLUS loans, that responsibility falls on the parents.
Borrowers who feel that they cannot afford their student loan payments may find value in federal income-driven repayment plans. Such plans base payments on income and family size; some borrowers see payment amounts as low as zero dollars. Additionally, any balance remaining after 20 to 25 years will be forgiven as long as the borrower stayed in the program.
"In the end, no matter how student loans were spent or by whom, the borrower is responsible for paying back his or her student loans," said Molina. "At AFBC, we help our clients who are in IDRs apply to remain in those IDRs. While they are still responsible for making their reduced payments, we hope those payments are much more reasonable based on their financial situation."
About American Financial Benefits Center
American Financial Benefits Center is a document preparation company that helps clients apply for federal student loan repayment plans that fit their personal financial and student loan situation. Through its strict customer service guidelines, the company strives 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