ROHNERT PARK, Calif., Aug. 23, 2018 /PRNewswire/ -- When possible, making extra payments on a student loan is a great way to reduce debt and pull closer to a zero balance. However, problems can arise. Loan servicing companies seem to make clients jump through hoops to make an extra payment count as intended. A cautionary tale describes a borrower who tried to pay off her student loans with an extra payment only to wait months for that money to be applied to her balance. Ameritech Financial, a document preparation company that assists borrowers with federal repayment plan applications, recognizes the struggle some borrowers face when navigating the complicated student loan system.
"Sometimes the loan servicers seem to make things confusing for borrowers," began Ameritech Executive Vice President Tom Knickerbocker, "and we've seen it, too. It's a complicated system that can make paying extra money difficult."
The cautionary tale goes like this: after 20 years of payments, a woman sends a lump sum of $7,000 to pay off her loan. After weeks of not hearing back, she is told that the check was sent to the wrong address, even though the money is gone from her bank account. Turns out, she didn't send the check to the wrong address. Instead, the loan servicer gave her the wrong address to send the check to. After months, her money was finally refunded but during this time, interest continued to accrue on her loan — creating another hassle.
"People have to be careful and detail oriented when dealing with their loan servicer," Knickerbocker concluded.
To make sure an extra payment is making the most impact on a loan, here are a few tips to follow:
- Double check the address that the check is being sent to;
- Write in a memo that is sent with the check that the check is meant to represent an extra payment, not an early one;
- Provide the loan ID number to have the payment applied to a specific loan (e.g., the one with the highest interest); and
- Send the payment a day or two after a regular payment (this more likely allows the extra payment to be applied to principal and not interest).
Extra payments are not the answer for all borrowers. Some people are lucky enough to know someone with the means to pay off their loans, but many will not be so fortunate. For some, even making regularly scheduled payments will represent an economic hardship. In these cases, a reduction in the payments due each month may be as beneficial as extra payments.
"We help people apply to enroll in income-driven repayment plans (IDRs) that help them keep some money in their pocket," Knickerbocker added.
IDRs structure a person's loan payments based on a ratio comprising of income and family size. This may allow the borrower to work toward eventual loan forgiveness in a manner that provides a more comfortable lifestyle and less everyday stress.
About Ameritech Financial
Ameritech Financial is a private company located in Rohnert Park, California. Ameritech Financial has already helped thousands of consumers with financial analysis and student loan document preparation to apply for federal student loan repayment programs offered through the Department of Education.
Each Ameritech Financial telephone representative has received the Certified Student Loan Professional certification through the International Association of Professional Debt Arbitrators (IAPDA).
Ameritech Financial prides itself on its exceptional customer service.
To learn more about Ameritech Financial, please contact:
5789 State Farm Drive #265
Rohnert Park, CA 94928
SOURCE Ameritech Financial