According to recently collected data, nearly 17% of Americans harboring student loan debt have failed to make a single payment on their student loan accounts in over a year. This figure represents the default and delinquency rate across the board of student loan borrowers and includes borrowers who are still enrolled in school and have not yet reached the repayment phase of their loans. This means that the amount of Americans who have fallen severely behind in their student loan payments is at least one out of every five borrowers.
What many borrowers don’t know is that they have options other than the standard repayment plan that they are automatically placed on at the time the loans are taken out. Standard repayment plans expect the entire student loan debt and interest to be repaid over the course of ten years. These plans do not take the borrower’s personal economic circumstances or income into consideration when determining what the borrower’s monthly student loan payments will be. Many borrowers simply cannot afford these plans.
The federal government has made income-driven repayment plans available to prevent borrowers from receiving unreasonable payments demands and to limit the borrower’s susceptibility to go into default. Income-driven repayment plans formulate monthly payments based on the individual borrower’s income and household size. These plans never charge borrowers more than fifteen percent of their discretionary income and after twenty-five years of successful payments, any remaining student loan debt may be forgiven.
The most prevalent issue with income-driven repayment plans is that the borrowers receive little information from their loan servicers on their options. Borrowers are often completely unaware that they even have repayment options. The loan servicers collecting debt on behalf of the federal government are charged with not only making payment demands, but also counseling the borrowers on their repayment options. Poor communication from loan servicers plays a significant role in today’s high number of student loan delinquencies and defaults. Loan servicers don’t want to help borrowers save money but Student Loan Law Group does.
To learn more about income-driven repayment plans, contact the Student Loan Law Group at 888-843-1706 or www.StudentLoanLawGroup.com.