EMERYVILLE, Calif., March 14, 2018 /PRNewswire/ -- Searching online for student loan advice often produces two key actions: pay down that debt as quickly as possible and refinance those loans. However, those are not the only options, and borrowers struggling with repayment may not find they are the best options for their situation. American Financial Benefits Center (AFBC), a document preparation company that helps its clients apply for and stay enrolled in federal income-driven repayment plans, reminds borrowers that private refinancing will result in lost protections that many find valuable.
"Federal student loans come with features and options to protect students in their repayment," said Sara Molina, Manager at AFBC. "Things like forgiveness and certain repayment plan options are only available to federal loan borrowers."
Refinancing may be confused with consolidating; in fact, the two terms are sometimes used synonymously. However, they are different and unique to the separate industries. Refinancing is when a borrower takes out a new private loan and pays off the old loan, which can be either federal or private. Consolidating federal loans is when a federal borrower takes out a new federal loan and pays off the old federal loans. Though similar, consolidated loans remain federal loans with borrower protections, while private loans never have those protections.
Those protections include loan forgiveness, delay options, and repayment plan options. Notably, federal income-driven repayment plans calculate payments based on income and family size rather than a set payoff term. At the end of a 20- to 25-year term, any remaining balance will be forgiven. There are also a variety of forgiveness programs, such as the popular Public Service Loan Forgiveness.
Options such as federal income-driven repayment plans allow borrowers with low income and/or large families the potential to lower their payments. For many, that means a greater likelihood of finding success in their entire financial situation.
"Refinancing might work for some borrowers, but those who are struggling with payments might want to consider IDRs before losing access to them permanently," said Molina. "At AFBC, our clients who are in IDRs are experiencing the borrower protections from federal loans. For some, IDRs are the only reason they can afford their payments, so we do everything we can to help them stay in those programs until either the end of the term or they decide to change course in their repayment journey."
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