The years when we were student are probably one of the most fun and beautiful days in our life, even with all these hardships and study, for all sleepless nights, and for the stress of all those exams. But if students took out student loans to provide their survive college years financially as most of the students do it, and then they would have a financial burden in the future. The financial burden of student loans can significantly increase the stress of all this uncertainty. Most students who solved a student loan problem have experienced the same fears. Although it may be difficult to make these monthly payments after graduation, students have options that can help ease the burden. There are many student loan forgiveness programs out there. If anyone has federal student loans, one of these options is the Obama Student Loan Forgiveness Program.
Who can take advantages of this program? What do you need to know?
If students have qualifying federal student loans, they will be able to reduce their payments or succeed to forgive loans, through the Obama student loan forgiveness program.
In 2010, President Obama adopted the law” Health Care and Education Reconciliation Act” which highlighted as a new start of student loan repayment and student loan forgiveness options. Although this is not considered as an official name, people call this act as the Obama Student Loan Forgiveness Program.
However, instead of simply reforming one single program, the law changed almost the entire vision of student loans.
This is how the law, which called Obama Student Loan Program, influenced federal student loans after it entered into force:
• Subsidies aren’t provided to private lenders for loans financed from the federal budget anymore
• Starting in 2014, new student loan borrowers may qualify for monthly payments that are equal to 10 percent of discretionary income.
• New student loan borrowers can apply for forgiveness of student loans in 20 years instead of 25 years
• Minority students will get better access to student loans, and colleges will receive additional funding.
How students can get benefit President Obama student loan forgiveness? Scroll below to find out more details to help students to get to know about this program:
Obama Loan Forgiveness Programs Available
President Obama’s national goal: America will again have the highest percentage of college graduates in the world by 2020. Considering Obama Student Loan Forgiveness, people usually talk about this student loan forgiveness program which being implemented by President Obama.
Standard Repayment Plan
If the student has a federal student loan, the Standard Repayment Plan allows the students to repay loans for 10 years. After this period all those loan debts will be fully paid off.
Income-Contingent Repayment Plan
To be eligible for the Income-Contingent Repayment (ICR) Plan, a student should be eligible federal student loans.
Although the ICR Plan is an ideal option for any student who has a low budget, the plan does not require to state your income. Under this program, monthly payments to students are based on their own discretion, or the amount that the student will pay within 12 years on a fixed repayment plan.
Income-Based Repayment (IBR) Plans
Like other plans, students will need to have federal student loans that qualify too. If the student has a federal loan and plans to pay income (IBR), can get the remainder of student loan forgiven after 25 years, or 10 years if he/she works in the public service. All federal student loans are eligible to participate, with the exception of student loans in default, Parent PLUS loans, and Parent PLUS consolidation loans. Monthly student loan payments are limited depending on income and family size. For example, a family of 3 people with an annual income of $ 45,000 pays only $ 157 per month according to the IBR plan. Students can apply for an IBR by contacting the lender servicing loan. Loans taken after July 22, 2014, according to the IBR plan, will be forgiven after 20 years instead of 25 years.
Pay As You Earn (PAYE) Plans
Obama Student Loan Forgiveness Program includes two payment programs:
• 1. Pay As You Earn (PAYE)
• 2. Revised Pay As You Earn (REPAYE)
Both of these programs are part of income-based repayment plans that are popular among federal student loan borrowers.
To apply for PAYE, students must demonstrate financial difficulties to the extent that they cannot afford to make the payments required for a standard 10-year repayment plan.
REPAYE has canceled this requirement. No matter what student’s salary is, their payouts will never exceed 10% of their income, depending on family size.
Graduated Repayment Plans
Graduated Repayment Plan, the Extended Fixed Repayment Plan, and the Extended Graduated Repayment Plan will be helpful for those who want to reduce their monthly payments in a short term.
This is basically the federal government’s way of recognizing that recent graduates often have low initial salaries. As a result, student’s monthly payments start lower than with standard repayment.
After two years, the amount of the monthly payment increases by 7%. Then it increases again by 7% every two years until your loans are fully repaid. The idea is that during the two-year period student should receive at least one promotion. This plan reflects this and helps students use their career and income increase to their advantage.
Once the two years are up, most students payments will go towards a loan’s principal and repayment period will be based on their balance.
The EGR Plan offers you an option to pay off your loans within 25 years while keeping monthly payments low for the first two years.
Public Service Loan Forgiveness (PSLF) Program
You may consider the Public Service Loan Forgiveness Program as another option:
The Public Service Loan Forgiveness Program is a government program of the United States which founded to provide students working full time in public service that has loans. The program gives another chance to direct loan borrowers who make 120 eligible monthly payments in accordance with a suitable repayment plan, working full time for a suitable employer to get the given balance.
Through the Public Service Loan Forgiveness Program, students working in public service at a qualifying nonprofit agency or governmental structure may have their loans forgiven after 10 years of monthly payments. Get familiar with the terms of this program carefully, while examining it.
Total and Permanent Disability (TPD) Discharge
Obama student loan forgiveness also includes the Total and Permanent Disability (TPD) Discharge, as a helpful program which includes borrowers who have a disability or permanent injury that prevents them from repaying student loans.
By getting approved for a TPD Discharge, students can have their debt canceled immediately, without any repayment period of other kinds of forgiveness programs.