An important part of the American dream that college is supposed to deliver is access to work with high wages and access to the home ownership. Together these two aspirations represent a significant part of the American dream. Equifax has published a study that shows that borrowers with high student loans are not purchasing homes. Those same buyers in a survey by Iontuition shows that these employees and potential homebuyers want employer assistance with student loan repayment, and prefer student loan repayment assistance over other forms of benefits.
The question for employers is how to provide that assistance in a cost-effective way. A unique way of offering the assistance is ensuring that employees that are Federal Student Loan Borrowers (93% of all outstanding student loans) take advantage of options available to them under the College Cost Reduction and Access Act.
Borrowers that are eligible for this program qualify for lower payments. Reasons that IDR is more cost effective:
- Universal coverage, almost all borrowers are potentially eligible.
- Once borrowers are in the program the effort to certify is de minimis
- The solution is holistic, allowing borrowers to deal with repayment of all federally guaranteed student loans (93% of all student loans issued) at the same time.
And they only have to do the work to get into the program once. Annual re-certification is required, but it is de minimis requreiment to certify income, family size and empolery. When they have made all of their payments, the borrower gets loan forgiveness for all sums that have not been paid. For some borrowers, loan forgiveness is tax-free. Borrowers have several options to choose from when repaying their student loans. The average borrower will save over $50,000 over the life of their repayment period.
We help borrowers optimize their options to achieve the lowest monthly payment and the shortest repayment time. Borrowers that enroll in income-driven repayment programs have two distinct advantages over borrowers not enrolled. Enrolled borrowers are in a plan that is designed to end on a date certain if the borrower makes all of their payments on-time. And the borrower can get the lowest payment allowed for their circumstance.
Employers that structure their assistance around borrowers that have enrolled in the low-cost payment alternatives can see their LRAP dollars go further. Because their employees have lower payments, the employer contribution will have a bigger impact. And some borrowers that get a payment of $0 may need no further assistance.
Borrowers are mostly told to look at interest rates when trying to lower their student loan payments. To do those borrowers must refinance their student loans to the private sector. The risk to the borrower when that happens changes enormously. Student loans that are federally guaranteed are collateralized solely by their incomes. That means for most borrowers defaulting on their student loans means that their wages will be garnished, but there is no other consequence. Also, borrowers that default on federally guaranteed student loans have the option to rehabilitate their loans and return the loan to good standing. Borrowers that default on private student loans will be sued. The result of the lawsuit is a judgment that can attach to any financial asset owned by the borrower except for their retirement plans. Most borrowers when informed of the risk change, would rather keep the same risk, while qualifying for lower payments and loan forgiveness. And that is exactly what Student Loan 411 LLC can give them.