Ameritech Financial: What Low Unemployment and Low Wage Growth Could Mean for Student Loan Borrowers
ROHNERT PARK, Calif., November 21, 2018 (Newswire.com) - Since the 2008 recession hit, the labor market has been slowly gaining traction in an attempt to get back to those glory days. While the market is doing very well, with a low unemployment rate, there is surprisingly a very low amount of wage growth accompanying it. What does this mean exactly? It shows that while everyone can seem to get a job and stay employed, wages are not increasing at the same rate. This can mean many things, but for student loan borrowers it could mean not being able to stay on track for student loan repayment. Ameritech Financial, a document preparation company, assists student loan borrowers in applying for income-driven repayment plans (IDRs), which may be especially important during times of low wage growth.
“The reasoning behind low unemployment and low wage growth is largely a mystery, but it is something worth watching and being aware of in the short term,” said Tom Knickerbocker, executive vice president of Ameritech Financial. “What we do know is that when people make more money, they may be able to pay off their student loans at a higher rate. Low wage growth doesn’t help that.”
The reasoning behind low unemployment and low wage growth is largely a mystery, but it is something worth watching and being aware of in the short term.
Tom Knickerbocker, Executive Vice President of Ameritech Financial
If the U.S. has a strong employment rate, why would wage growth be down? The New York Times early last month wrote about this topic and laid out a couple hypotheses. One is that while some may blame an actual decline in inflation, it is not the sole culprit. In theory, with inflation, we would see wages grow in order to cover the inflation and a decline in inflation would cause a decline in wage growth. However, the decline in inflation is not nearly close enough to that of the decline in wage growth. Another hypothesis is the workforce is now older than it was in 2001, meaning the main cohorts are less likely to have an increase in their wage. However, wage growth is still lower for everyone (no matter age, gender or education) than pre-recession. Okay, so if not inflation or the fact everyone is older, how about productivity? But this year even the most skilled workers, and those who are typically the most productive, still did not see any bump in wage growth. Wage growth is still down across jobs of all skill levels.
While all these hypotheses hold some possibility, one does not stand out above the rest as the sole reason for lower wage growth. For student loan borrowers, low wage growth might mean difficulty staying on track for repayment because borrowers may possibly be experiencing a strain on their finances. If this is the case, borrowers could turn to an income-driven repayment plan (IDR) in order to stay on top of repayment. IDRs allow borrowers to repay what they can based on income and family size, which can help when faced with low wages.
“One thing is certain — in order for student loan borrowers to feel secure about staying on track for repayment, there needs to be wage growth. We want to help our clients navigate what some may consider to be a complex process of applying to enroll in IDRs so they are able to do what they can with what they have,” said Knickerbocker. “We want to help them worry less about what they don’t have and focus more on the goals they want to achieve with what they do have.”
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