It’s a question both borrowers and students ask: how much is too much student debt? Whether the question comes from a planning standpoint or curiosity, the answer may not be so straightforward. Many factors, as well as one’s definition of “too much,” may contribute to the classification. Ameritech Financial, a document preparation company in the student loan industry, helps borrowers apply for income-driven repayment plans through the Department of Education when they decide that they have too much student loan debt and seek alternative avenues for repayment.
One major critique of federal student loans is that they are far too easy to take out. They are not based on students’ ability to pay them back, like private loans and other debts are. Instead, they rely on the future value of one’s education. However, even if students try to predict that value and borrow accordingly, they may still be taking on too much debt.
“Deciding whether you have too much student debt is an important first step in managing your debt situation,” said Tom Knickerbocker, Executive Vice President of Ameritech Financial. “It can be emotional to realize that you took out too much debt. But once you know something needs to change, you can switch gears to determine what to do. We help borrowers decide on a game plan.”
Experts often recommend taking out no more than their predicted first year’s salary in total student loan debt. While those numbers may seem easy to predict, the job market can be unpredictable and borrowers can have trouble landing their target job with the required wages to make those student loan payments. In fact, about one-third of college graduates are working in jobs that do not require a degree.
According to Department of Education guidelines, borrowers should pay no more than 15 percent of their income on their student loan payments. Any balance that results in a payment of more than 15 percent of a borrower’s income is, therefore, too much. In fact, the available income-driven repayment plans (IDRs) are based on that concept. IDRs calculate payments as 10 or 15 percent of discretionary income.
“It might come down to an emotional response for borrowers to decide that they have too much debt,” said Knickerbocker. “But the good news is that those borrowers usually have options to help with that debt. At Ameritech Financial, we help borrowers apply for and stay enrolled in IDRs that can lower their payments substantially, making it easier and less stressful to pay down that debt.”
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.
Ameritech Financial is a member of the Association for Student Loan Relief (AFSLR), and each representative on the phone 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.