The increasing problem of students’ loan debts in the United States led to the introduction of Obama Student Loan Forgiveness by the President Barack Obama. This program has been devised to help the students who are unable to pay their loan amount in full or have paid a significant amount of the total loaned amount. It is estimated that nearly five million people can be affected by this loan program. The ones who have made regular and timely payments of their current federal loans for more than 20 years will have their outstanding debts cleared by this plan introduced by President Obama.
What is the aim of Obama student loan forgiveness?
There are many college students and graduates who are burdened by financial loans, so the Obama Student Loan Forgiveness program will help to ease and alleviate their financial burdens. The main goal of this program is to free the students from worrying about clearing off their debt amount so that they can focus on academics. If the students are worried about settling debts for a decade then they will be unable to focus on getting a degree.
What is the benefit of Obama’s program over others?
The calculation of loan settlement by borrowers is calculated by considering the size and income of the family of borrower. There is a restriction on monthly loan payments of about 10% of the total income of the ones who qualify for this program. For instance, on the standard repayment scheme a person who earns $50,000 per annum and have a current loan balance of $40,000 at 6.8% annual percentage rate (APR) have to pay a minimum amount of $460 per month. The benefit here for the borrowers is that they have to pay lower amounts of money as compared to other settlement plans available on the financial market for the repayment of student loans.
What are its qualification requirements?
It is important to note that not every student loan borrower may qualify for Obama Student Loan Forgiveness program. The borrowers who have federal loans like Stafford loan or Perkins loan are eligible and that too if they have borrowed the money on or after October 1, 2007. If a person wants to know whether he is eligible for this program or not then he has to first determine the date of taking the loan. In addition to that, one should know that if he has defaulted to pay the loan amount at any point of time then he is ineligible for this program. If a person is unable to get respite through the Obama Loan Forgiveness program then he should consider talking to his credit servicer for giving him a perfect substitute plan. However, he should be aware of the fact that it will take him longer time to pay off the debt.
The Obama Student Loan Forgiveness plan is not into action yet. The target implementation date has been set for December 2015. So the ones who are looking to be a part of this program has to patiently wait until the program comes out in full action.