American Financial Benefits Center: Study Shows Risky Parent PLUS Loans Widen Income Gap
EMERYVILLE, Calif., July 30, 2018 (Newswire.com) - A recent New America analysis of Education Department data demonstrates how high-risk parent PLUS loans are for families of color, especially black families. The study shows that these families have the highest default rates caused by long-standing economic disadvantages exacerbated by the housing crisis. Federal student loan policies, especially parents taking on PLUS loans for their children, drive an intergenerational accumulation of debt that burdens the most disadvantaged families. Of the millions of Americans struggling with student loan debt, these families have the most difficult financial struggles. American Financial Benefits Center (AFBC) is a document preparation company that assists our clients with applications for income-driven repayment plans offered by the Department of Education.
“The most heart-wrenching thing is that these parents, by trying to help their children out of difficult economic circumstances, are further lodging themselves and their children in adverse economic conditions,” said Sara Molina, manager at AFBC. “Our goal is to help as many people as possible who seek assistance in recertifying their repayment plans where such individuals feel they will benefit the most by remaining in such programs with the chance of having their debt forgiven after 20 or 25 years in such federal programs.”
The report shows that black students are more likely to go to private institutions or lower-performing public institutions and take career paths that are much less financially advantageous than their peers. Deeply impacted by predatory lending practices of the sub-prime mortgage crisis, black parents also have higher unemployment rates compared to other groups. This creates inter-generational higher education debts as both parents and their children are more likely to default on their loans, widening an already large economic gap.
The most heart-wrenching thing is that these parents, by trying to help their children out of difficult economic circumstances, are further lodging themselves and their children in adverse economic conditions.
According to the report, the pressure this applies on families is enormously impactful. Though parent PLUS loans were initially created to help middle- and upper-class families pay for their children’s higher education, parent PLUS loans were expanded to increase access to low-income students. But, due to existing financial conditions, they ended up burdening two generations within the same family with student loan debt.
“We advise those who have not already taken out parent PLUS loans to be very cautious about doing so,” said Molina. “We don’t want well-meaning parents to jeopardize the future financial health of their families, despite the best of intentions. For those who already are burdened by student loans, we suggest considering federal income-driven repayment plans to help manage those loans, especially if struggling to make monthly payments.”
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.
Each AFBC telephone representative 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