ROHNERT PARK, Calif., April 30, 2018 /PRNewswire/ -- Student loan servicers have been accused of steering borrowers into forbearance even when they would benefit more from a different repayment plan. However, servicing companies are not the only ones doing so. The U.S. Government Accountability Office (GAO) recently published a report describing a similar practice employed by schools. Ameritech Financial, a document preparation company that helps federal student loan borrowers with federal repayment plan applications, reminds borrowers that long-term forbearance may set them back in their student loan repayment.
"Falling behind on student loan payments looks bad for more than just the borrower," said Tom Knickerbocker, executive vice president of Ameritech Financial. "Borrowers who need relief from high payments might be easily placed into forbearance to delay the payments, but that's all they do: delay."
Federal law requires that colleges who wish to offer their students federal student loans have favorable repayment outcomes of student cohorts three years after graduation. If too many students in a cohort default on their loans within those three years, the school may lose their ability to offer federal student loans.
According to the GAO report, many schools have been hiring consultants to reach out to borrowers who are at risk of defaulting. The report identified several instances in which the consultants encouraged forbearance over repayment plans that may have been more beneficial over time. Additionally, borrowers in long-term forbearance seemed to merely delay defaulting until their fourth year of repayment, when schools are no longer accountable and at risk of losing access to federal loans.
While GAO recommends strengthening schools' accountability, Ameritech Financial suggests that borrowers do their research before entering into forbearance. Those who need a long-term solution to loan affordability may wish to consider federal income-driven repayment plans. Such plans base payments on income and family size and can end in the forgiveness of any remaining balance after 20 to 25 years in the program.
"Forbearance is well-known but not necessarily the best option for all situations," said Knickerbocker. "At Ameritech Financial, we help borrowers understand longer-term solutions and submit applications for income-driven repayment plans. We always encourage borrowers to be as informed as possible about their options before going with any over the others."
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