Obama Loan Forgiveness

If you have qualifying federal student loans, you may be able to reduce your payments, or have your loans forgiven, through Obama student loan reform.

In 2010, President Obama signed into law the Health Care and Education Reconciliation Act, and ushered in a new era of student loan repayment and student loan forgiveness options.

And while it isn’t the official name, the act has been labeled by many Americans as the Obama Student Loan Forgiveness Program. However, rather than just reforming one single program, the act transformed nearly the entire student loan landscape.

Here’s how the act, which we’ll refer to as the Obama Student Loan Program, impacted federal student loans once it went into effect:

  • Subsidies are no longer given to private lenders for federally-backed loans
  • Starting in 2014, new student loan borrowers can qualify for monthly payments that equal 10 percent of discretionary income
  • New borrowers can qualify for student loan forgiveness in 20 years instead of 25 years
  • Minority students will have better access to student loans and colleges will receive additional funding

Beyond these benefits, how did President Obama help with student loans exactly? Here are some more details to help you get started.

Discover if you qualify for an Obama forgiveness program right now for free.

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Obama Loan Forgiveness Programs Available

Since the Obama Loan Forgiveness Program affected several existing federal student loan programs, there are a number of ways to qualify for each.

For more information on each program, click on the following links to explore how the individual Obama forgiveness program can help you.

Standard Repayment Plan

If you have federal student loans that qualify, the Standard Repayment Plan lets you pay off your loans at a fixed rate for 10 years, after which your loans will be paid off completely.

Income-Contingent Repayment (ICR) Plan

To qualify for the Income-Contingent Repayment (ICR) Plan, you’ll first need to have eligible federal student loans.

While the ICR Plan is ideal for anyone with a low income, there isn’t an income requirement associated with the plan. Through this program, your monthly payments are based on your discretionary income, or the amount you’d pay over 12 years on a fixed repayment plan.

Income-Based Repayment (IBR) Plans

There are two IBR programs available, including the original Income-Based Repayment (IBR) Plan and the IBR for New Borrowers Plan. Like other plans, you’ll need to have federal student loans that qualify, and you’ll also need to sign up for the program that is designed for when your loans originated.

For the IBR Plan, these are any loans made prior to July 1, 2014. IBR for New Borrowers, on the other hand, are for loans originating after that date.

Another requirement you will need to demonstrate is a partial financial hardship, which is based on your income, your state’s poverty level and your family size.

Through these programs, you can have your monthly payments capped at 10-15 percent of your discretionary income if you qualify, which is a huge benefit to struggling borrowers. Your payments will then be adjusted annually, but you could earn forgiveness after 20-25 years of qualified payments.

For more details on Obama Loan Forgiveness, speak with student loan specialist by phone at 800-771-6358.

Pay As You Earn (PAYE) Plans

As part of the Obama Student Loan Forgiveness Program overhaul, both Pay As You Earn (PAYE) and the new Revised Pay As You Earn (REPAYE) programs were set into motion.

The PAYE Program offers those with qualifying federal student loans under financial hardship the ability to repay student loans made before October 1, 2007 – as well as disbursed or consolidated loans made on or after October 1, 2011 – at 10 percent of discretionary income.

The REPAYE Program is similar to the PAYE Program, but includes all qualifying federal student loans, regardless of their origination date. Like the PAYE Program, monthly payments through the REPAYE Program are capped at 10 percent of your discretionary income.

Both programs offer forgiveness after 20 years of qualifying payments, unless you have earned a graduate or professional degree, in which case you will need to make 25 years of consistent payments in order to qualify.

Graduated Repayment Plans

If you’re interested in reducing your monthly payments for a short period of time, the Graduated Repayment Plan, the Extended Fixed Repayment Plan and the Extended Graduated Repayment Plan may be able to help.

With qualifying federal loans, the Graduated Repayment Plan will reduce your payments for the first two years upon approval. During this time, you’ll only be making payments towards your loan’s interest.

Once the two years are up, more of your payments will go towards a loan’s principal, and your repayment period will be based on your balance.

If your student debt is more than $30,000, the Extended Fixed Repayment Program may help, as long as you have loans that qualify and don’t have any outstanding balances prior to October 7, 1998. For the first two years under this program, all your payments will be made towards your loan’s interest at a fixed payment amount. After two years, you’ll then begin paying towards your principal, and you’ll have up to 25 years to repay your loan.

The Extended Graduated Repayment Plan is similar to the Graduated Repayment Plan, except it gives you up to 25 years to repay your student loans, while keeping your monthly payments low for the first two years.

These plans are ideal for anyone who has a lower income and is expecting to make more money in the near future, or those who want to have more of their income to spend for the initial two years of each program.

Find out if you can take advantage of Obama Loan Forgiveness for free.

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Teacher Loan Forgiveness

Obama student loan forgiveness for teachers is available in several ways, if you’re a qualified teacher who has one of several required federal student loans, and you’re working in a school that also meets the requirements for this type of plan.

In addition to a Perkins Loan Cancellation, which could eliminate any existing debt on your Perkins Loan, there are a number of other programs you may be eligible for.

As part of the Obama forgiveness initiative, these programs give teachers a way to continue in the profession they love, while still having the ability to make reasonable monthly payments. Additionally, you may have an opportunity to have your debt eliminated completely if you meet a program’s qualifications.

Public Service Loan Forgiveness (PSLF) Program

If your career has you serving the public in a public service position, non-profit organization or similar agency, you may qualify for the Public Service Loan Forgiveness (PSLF) Program.

As a borrower of qualifying federal student loans, as well as working for a qualifying employer, you may be able to have your debt erased completely after making 120 consistent, on-time payments. This means that within 10 years of making student loan payments, you could have the remainder of your debt forgiven – and you won’t have to claim it on your taxes, either.

Total and Permanent Disability (TPD) Discharge

Obama student debt forgiveness also includes the Total and Permanent Disability (TPD) Discharge, which is an incredible program for borrowers who have a disability or permanent injury that prevents them from repaying student loans.

If you are unemployable and can have your total and permanent disability verified by the U.S. Department of Veteran Affairs or your physician, you could qualify for this program. These include physical and/or mental impairments that have persisted for 60 months or more, are expected to continue for that length of time, or may ultimately result in death.

By getting approved for a TPD Discharge, you could have your debt erased immediately, without the accompanying repayment period of other types of forgiveness programs.

For more details on Obama Loan Forgiveness, speak with student loan specialist by phone at 800-771-6358.