President Barack Obama will undoubtedly be remembered for his healthcare reform legislation that was recently passed by Congress. However, there is another program that is much less well known that could affect far more people directly. This is the Obama student loan forgiveness program.
Under the terms of this program, anyone who makes his monthly payments for twenty years after leaving college is eligible to have his/her remaining balance forgiven. At least, this applies to anyone with Federal Direct loans, Stafford loans, and Perkins loans. Those who take out their loans from private lenders such as Sallie Mae are still responsible for repaying their loans in total.
Individuals who spend ten years in public service positions become eligible to have their loans forgiven at that point rather than having to wait the full twenty years. This means that their debt is forgiven in half the time and their debt reduced significantly sooner.
It is also a part of the plan that monthly payments be capped at a level of 10 percent of the money that left over when all taxes are paid and basic necessities taken care of. This cap has been at 15 percent, which takes a lot more money out of the pockets of citizens and out of the economy.
There are also programs in place that allow teachers to work for just five years in elementary or high schools that have been designated as low income schools by the Dept. Of Education. This applies to FFEL loans and to Direct loans.
Military personnel are also able to achieve forgiveness for their student loans if they have a degree. This program works for members of all five branches of service, including the Coast Guard and Reserves.
A final option is to apply for income based repayment terms. While it is probably best to sign up for this early in the life of the loan, older loans may still qualify for this lower payment plan. Of course, the clock starts all over when one signs up for this option. That means that someone who has worked in public service for eight years and signs up for income based repayment must work another ten years in public service instead of the two he/she would have had left.
Student loans are a fact of life for the vast majority of college graduates. This is especially true of those who go beyond a bachelor’s degree and take graduate level classes. Sadly, the much higher pay they were promised if they pursued their education to its fullest has not materialized. The economic recession has made this fact even worse for most.
The Obama student loan forgiveness program is intended to help ensure that individuals do not wind up broke because they chose to continue their education. While nobody will see his/her loan just disappear overnight, payments have been lowered and the time shortened that one must pay before the remaining balance is forgiven. Public service workers and teachers are eligible for forgiveness at much faster rates due to the nature of their jobs.