Interested in info on President Obama’s student loan relief program? Well, back in October 2011, Obama announced something that is pretty great for those of us with a staggering amount of student loan debt.
Obama’s student loan forgiveness program is designed to give people like you and me a break on these crippling student loans that make it difficult for us to buy homes and generally move on with our lives after college.
The President’s program focuses on helping people who are having difficulty paying their student loans, even if they have been paying on them for years now.
How Obama Student Loan Forgiveness Works
The basic of Obama’s student loan forgiveness plan lets you pay only what you can afford. And after making payments on your student loans for a period of 20 years, the remaining balance is forgiven. Just like that.
Note that this is only for Federal student loans, so if you have some of those evil private student loans like me, then those are not a part of this student loan forgiveness program.
Even better, people who are in the military or some other employment fields can see their loans forgiven even sooner than the 20 years of payments!
Details On The Obama Loan Forgiveness Program
The primary feature of this Obama forgiveness program is that it is a pay-as-you-go model.
What this means is that your loan payment is based on how much money you earn each year. So, year’s when your income is up, the payments go up and vice versa. It does this by calculating the loan payment amounts based on borrowers family size and income.
As a result, it has never been easier for low-income borrowers, and those with large loan balances, to complete their school loan payments.
How The Obama Forgiveness Program Works
If you’re thinking that this student loan forgiveness program sounds pretty good, then you are not wrong. In fact, Ive been reading about it since it first became available. So, let me explain how it can work for you.
If eligible for the Obama student loan forgiveness program, you can expect to see your student loan payments capped at 10 percent of your adjustable gross income. Information from your Federal Income Tax form is used to determine the payment amount.
Obama Student Loan Forgiveness Plan Eligibility
Unfortunately, not everyone is eligible for this student loan forgiveness plan. The only borrowers who can benefit from this must have some federal loans, or have taken out a loan, on or after October 1, 2007.
Since not everyone with student loans is eligible for this, let’s look at the requirements that must be met:
- Borrowers must have taken out loans in 2008 or later, and who also take out a new loan in 2012 or later
- You must have at least one federal loan from the government (a direct loan) and one loan that originated with a bank (a guaranteed) loan
- If you have a private student loan, you may not qualify for this program
- Your student loans cannot be in default
- Borrowers who are already in repayment are not eligible for this plan’s benefits
- Borrowers must meet salary-to-debt ratio conditions as determined by the IBR calculator
And remember, the loan that you have must be a Federal loan like a Stafford, Grad Plus, or Perkins loan.
Main Benefits of Obama Student Loan Forgiveness Act
Now that you know how to qualify, let’s look at why you should be interested in the Obama loan forgiveness program.
Here are the main benefits of this program:
- Payments limited to 10 percent of income
- Any remaining debt forgiven after 20 years; or 10 years for public service workers