Obama’s Student Loan Forgiveness Plan
Obama approves student loan forgiveness program but in reality there is no student loan program that offers a complete forgiveness for student loan. Obama was talking about the programs that offer you the forgiveness of the remaining balances of your student loans after 20 years. Your remaining loan balances will be forgiven after 10 years if you are a public service worker. That’s quite unrealistic, because everybody can’t work as a public service worker for at least 10 years to get the forgiveness on their student loans.
A teacher loan forgiveness program exists for free and direct loans and you can avail it if you are a teacher, but not all teachers can qualify for it. Only full time teachers are qualified for teacher forgiveness program, such as those who have been working as a teacher for 5 consecutive years either at an elementary or secondary school at the low income schools. You can avail a student loan forgiveness program if you are in military with a degree. This program is also fixed for Coast Guard Reserves.
If any of the above mentioned options doesn’t fit for you, then you can go for another option that is the income based repayment program (IBR). Obama proposed a student loan repayment plan that is capped at 10% of the income of the students after their living allowances. It is currently capped at 15% of your income. This plan will be helpful for you to reduce your monthly payment.
Students who are with federal Stafford, Grad Plus, and Perkins loans can take help from the income based repayment forgiveness plan. Private lenders including Sallie Mae or Chase are not the part of this forgiveness plan. If you want to know your monthly payments under the Obama’s new income based repayment plan, then use nay online loan calculator.
For newer loans, the income based loan forgiveness plan is the most effective plan. The loan forgiveness plan will start from the time when you chose it regardless of the time of the loan issued to you. If you have been working in a public service sector for 8 years and you take out Obama’s loan forgiveness plan, then it will take you only 2 more years to get rid of your remaining loan balances. If you select the income based repayment plan now, then your time will be reset and as a public service worker you will have to wait for next 10 years to get rid of your student loan. Regardless of the time when they were issued, federal student loans qualify for income based repayment plan. This plan has one exception that applies to you if you were associated with an income contingent payment program in past.
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