As Americans continue to invest in education, student loan debt out paces mortgage, auto, and credit card debt. According to an article by My Budget 360, student loan debt is now the second largest sector of household debt approaching $1 trillion. This massive increase signals two things:
- Students applying for financial aid need to be educated on how to manage and repay their debt after graduation
- Schools and Universities need help collecting debt
U.S. News and World Report explains the Income-Based Repayment (IBR) plan that allows graduates to pay back their federal loans on a sliding scale based on their income. When a student that has borrowed loans graduates, they must start paying back their loan. This can be difficult with the current job market and sluggish economy, making it difficult for new graduates to find employment.
“IBR caps student loan payments at a reasonable percentage of income. Payments are based on income and family size, with most people paying 10 percent of their income or less. Repayment of student loans under IBR is limited to a maximum 25-year period, after which the remaining balance is forgiven. All federal student loans can be repaid through IBR, even if the loans were borrowed a long time ago or the federal loan was borrowed from a bank or private lender through the Federal Family Education Loan (FFEL) program…Unfortunately, IBR is not available for private loans (another reason to step away from private loans). IBR is a good option for out of work or underpaid student loan borrowers.”
A second form of loan repayment is Public Service Loan Forgiveness (PSLF), which provides forgiveness on federal educational loans for people who work in the public service sector for 10 years. If a student takes advantage of PSLF and works in the public sector, one will have lower monthly payments and loan forgiveness after 10 years.
On the flip side, schools and universities need a way to diplomatically and efficiently manage debt collection. Optio Solutions works closely with schools and universities to collect student loan debt, offering cost-effective services that don’t alienate your students from finishing their education, re-enrolling or seeking further education because they owe you money. Overdue tuition, book fees, parking tickets and healthcare fees are all a burden to the books. Let Optio Solutions work with you and on your behalf to resolve these delinquent accounts, maximize profit recovery, all while maintaining student satisfaction and loyalty.
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