By Ryan Laspina
Senior Specialist, Red Flags and External Reviews
One of President Obama’s initiatives that recently came into play is the “Obama Student Loan Forgiveness” program. Obama and the federal government put this aid program into place to help students with the ever-mounting problem of student loan debt in the U.S. This problem has become a national crisis.
While programs have been created before to aid students, this program is a significant step toward helping students with large loan debt and low income. It helps students to not only be responsible about their financial obligations, but also gives them a much-needed break later on in life.
Here is some important information to know about the Obama Student Loan Forgiveness program:
- To qualify for the Obama Student Loan Forgiveness program, you must enroll in the Pay As You Earn (PAYE) repayment plan.
- Your monthly student loan payment would be 10% of your discretionary income. You could actually have months in this plan where you pay $0 a month if you fall under economic hardship.
- Under this program, student loan forgiveness takes effect after 20 years of monthly payments instead of 25.
Be careful about who you speak with about repayment. When the federal government began this program, fraudsters appeared to take advantage of desperate students with a massive amount of student loan debt. There are third-party servicers out there that portray themselves as being part of the Obama Student Loan Forgiveness program, but they’re not.
The only entities you should speak with about your repayment options are your loan servicer and trusted officials at your school. You may also talk with any trusted debt management company that is a partner to your school. For example, the University partners with Educational Credit Management Corporation (ECMC) to aid students with debt management.
It is also important to remember that this student loan forgiveness plan does not kick in for at least 20 years. If a debt relief company is offering something that sounds too good to be true, it probably is.
Qualifying for loan forgiveness is not easy. However, always reach out to your loan servicer to find out your options.
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