First of all, although Obama endorses student loan forgiveness, I have not found any programs that would completely forgive any student loan immediately. The programs that Obama was talking about allows any remaining balance of your student loan to be forgiven after 20 years. If you are a public service worker, your remaining balance will be forgiven after 10 years. This seems a little bit unrealistic. Not everybody can work as a public service worker for 10 years to have their student loan forgiven after that.
If you are a teacher, there is a teacher loan forgiveness program for FFEL loans and Direct Loans. However, not all teachers are eligible. Those who qualify are full-time teachers who have been working as a teacher for 5 consecutive academic years in an elementary or secondary school which the US Department of Education designates as “low-income” schools.
If you are enlisted in the military with a degree, there is a program to have your student loans forgiven. This also applies to Coast Guard Reserves. More information here.
If the options above doesn’t suit you, another option is to look into the Income Based Repayment (IBR) program. Obama proposes to have student loans repayment plan capped at 10% of their income after living allowances. Currently it is capped at 15% of your income. You may not have your student loan forgiven right away but this will help you reduce your monthly payment.
However, this income-based repayment is only available for students with federal Stafford, Grad Plus, and Perkins loans. Private lenders such as Sallie Mae or Chase are not included in the plan. To read more about the Income Based Repayment program, click here. If you want to find out what your monthly payment would be under Obama’s new income based repayment plan, go here and use this calculator.
The income based repayment program is more effective for newer loans. Although it does not matter how long ago the loans were issued, choosing this repayment option will start the clock all over again. If you are a public service worker and have been working as one for 8 years, under the new Obama student loan forgiveness program, it will take you only 2 more years until the remaining balance will be forgiven. How ever, if you switch to income-based repayment now, the clock will be reset and start over again and you will have to wait for another 10 years as a public service worker to be able to be forgiven. elMost federal student loans are eligible for income-based repayment, no matter how long ago they were issued. The only exception to this rule is if you were previously in an income-contingent payment program.
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8 Responses
I think this is great of Obama in making education a vital part of the economy. However, I am seeking insight and information on continuing beyond the Masters degree when you have met the cap in federal student loans and cannot ascertain private funding on your own (without a co-signer). Especially, when trying to continue via online studies, work full-time, and raise a family. Help!
Posted on February 2nd, 2010 at 7:49 am
Yeah, not too sure how I feel about this either. Like what you said, it’s not realistic…Hopefully they can change some things around accordingly.
Posted on February 2nd, 2010 at 10:53 am
I am confused as to how anyone could view this plan negatively. Just a soft reminder that previous plans would require loanees to pay monthly until the loans were completely paid off. Those who are currently working in public service will be excused after 10 years. I don’t see it as “unrealistic” that our president is encouraging his people to go into public service. If this is not an option for you, your loans may be forgiven after 20 years. Once again, without this plan, loans will be paid until the balance has diminished.
Once again, I’m curious to find out the negative side of forgiven student loans at 10, 20, or even 40 years.
Posted on February 2nd, 2010 at 6:56 pm
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Posted on February 3rd, 2010 at 2:48 pm
Why is this proposal bad? Who do you geniuses think will pick up the tab for these people who get their loans forgiven? ….logic fail, eleanor. Nothings free
Posted on February 6th, 2010 at 6:15 pm
@ Andrew: Look man, if we don’t get our piece the same amount of money will just go to political appointments. Might as well get your stimulus!
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Posted on March 4th, 2010 at 3:50 am
I like this idea but as a teacher, there is a loan forgiveness program but not all of your loan is forgiven. If you are a math, science or special ed teacher part of it goes away……any other teacher only 5000.00 is forgiven. Will there be any adjustments to this?
Posted on March 11th, 2010 at 8:26 pm
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