February 2nd, 2010 
Elisheva Wiriaatmadja
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.
Popularity: 100% [?]
Powered by MightyAdsense
Posted in 
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!
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.
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.
[...] Obama Student Loan Forgiveness Program [...]
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
@ 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!
Goodday to all,
I am Mr. philip morgan, a reputable loan lender. we are a company with financial
assistance. We credit the funds to individuals in need of financial
assistance that have bad credit or need money to pay bills, to invest in the
business. I want to use this medium to inform you that we will provide
reliable beneficiary assistance as I’ll be glad to offer you credit. E-mail:
philipmorgan.loanfirm@googlemail.com
FIRST LOAN QUALIFICATION DETAILS REQUIRED:
Full name :……….
Country :………….
Gender :………….
Occupation :………
The amount needed …………
Purpose of loan ……..
Loan Duration :…………
Phone Number ………….
Regards.
Mr philip morgan
E-mail: philipmorgan.loanfirm@googlemail.com
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?
Frankly, I can’t say that I’ve found my federal loans to be the problem. I am having problems with my private Sallie Mae loans which are sucking the blood out of my family without any qualms or ethics. I WANT to pay my loans, but I can’t afford to pay a loan that is 1,200 a month. I just CAN’T! My HOUSE payment is lower than that! I am devastated that Obama hasn’t cracked down on the real preditory lenders like Sallie Mae…what are the millions like me supposed to do? Prostitution is not an option, though it was SUGGESTED as an option by the sadistic asshole that I spoke to at Sallie Mae! Very sad right now. very sad.
What is negative is that if you work in a public service type job you don’t make enough to pay the student loan and live…unless you still live with your parents…And Sara is right on, those of us who graduated 5+ years ago got suckered into consolidating right out of school locked at ridiculous rates of 7.75% with private banks and didn’t realize that we would miss out on opportunities in the future…We are screwed..and we should be forgiven because we are the ones who went to school to earn a better living and the government is expecting our income to be spent in the “marketplace” to stimulate the economy but we are spending all our money on school loans and mortgages…It would truly be a stimulus to the economy of school loans were forgiven…it wouldn’t cost the tax payers, or the schools or the banks…they already made their money on the interest from the loans at upwards of $20/day. It is outrageous to go to school, get a job and make more than 50/60/70 grand per year and after you pay your school loans and living expenses have barely any money for luxuries like clothing, care repairs, or a new dryer…. and be killed in taxes, lucky if we don’t owe…when those who didn’t go to school make less than 40grand get more than 10,000 back on taxes each year for big screen TVs and phat vacations…the middle class from $50,000 to $100,000 are barely making ends meet….forget about bailing out the automobile industry…bail out your hard working American families in debt to our eye balls..it would be cheaper for the government and be more effective…
My best advise to everyone heading to college… Start saving your money… forget the Ipod, cell phones, lap tops, and every other expensive thing until you have saved the money you need for school… next stop using credit cards… if you can’t afford it… don’t buy it… The biggest problem in our country is The use of Credit… Do you all realize that if kids can’t afford to go to college… the colleges would be forced to lower their prices… that is the how the market works… When demand is high… Prices go up… When demand is low… Prices go down… This loan forgiveness program isn’t going to help anyone here and now… and IF it were to be a ‘real’ program in the future… it won’t matter because there will have been several elections before then… NEVER follow the carrot that is dangled in front of your face unless you can physically reach it today!!! Shame on Obama for another trick with smoke and mirrors… Wait until the reality of the Obamacare comes about!!!
There is no FREE LUNCH you subhuman piece of refuse. If you borrowed loans, you whitebred hipster faggot, you must pay them back, with much much interest. You, sir, are my food. GITT IN MA BELLY!
The fault with the program is that nothing is free. If your loan is forgiven, who pays your balance? If you borrow money, you should be expected to pay it back. You where not required to buy a house that would overextend your budget. When you borrowed the money for college, you should have understood that someday you would have to pay it back. When in times of need I have been forced to take on 2 and even once 3 jobs to make my payments. I understand that events happen that cause your income to change that is beyond your control but We need to take responsibility for our promises. People are upset when a business is unable to fulfill its promises, but when it is us we expect to be forgiven.
Does anybody know how this loan forgiveness program works. My daughter would like to go back to school but is beind in her loans. Is there help for her?
First of all, this is NOT an ‘Obama plan’ – the legislation for this program was set in motion long before Obama ever came to office. He just announced it while most banks and lending institutions hide it because it would take business away from them.
If your loan is forgiven, who pays it back? Considering that you have to reconsolidate with Direct Loans through the DOE, and are therefore paying interest into the pot, my guess is that it is a combination of invested interest and perhaps some tax subsidy that pays for the excess. It does not matter if youhave already consolidated under another lender – this consolidation is open to anyone (although I think PERS loans are not included).
In addition, the 20 year forgiveness without public service comes with a hefty taxable income statement – as you are essentially taxed on the balance of your loans for that year as income – so there is no free lunch there. Depending on the size of the outstanding loan, you could easily be looking at a payment plan to manage your tax debt.
The 10 year forgiveness status comes only after ten years of payments through the plan – which amounts to, for example, 16 years of public sector work for myself – earning an income that is 60% of what I could be making doing what I do in the private sector. When loans are forgiven under that circumstance, the remainder is not taxable. At the same time, the IBR repayment option really only provides assistance to folks who earn less in a year than what their total student loan indebtedness is. So for example, it benefits someone who makes $45k a year when they have $70k in loans after getting a Master’s degree.
Otherwise, if you can make a payment that typically would enable you to pay off your loans in 10 years, YOU MUST DO THAT. The IBR adjusts every year by taking into account your tax returns and other information about your sources of income.
So when you ask who pays for it – in the end, I do, but at least I am able to work for an agency that is not profit-driven and has closer alignment to my personal mission and why I got into my present career in the first place. I pay for it by not selling out to private corporate interests because my loans force me into the meat grinder. I get less monetary income, but I can sleep at night and not default on my loans.
What Sara and Thea said. The student loan industry is legalized theft. I am paying on collection charges for a loan that was initiated in 1984. They have gotten their money plus interest long ago. They move the account from one Sallie Mae owned collection agency to another. Every time a new agency gets the account they add another collection fee. They have no conscience at all. They are blood suckers and will continue to be until we vote the incumbents out of office and get the laws changed. The current representatives will do nothing at all for their constituents. Congress is owned by corporate America and corporate America is no longer American. There was a time when fraud was illegal anywhere. It’s now legal in the United States.
It might work, but I doubt it, if on one or two days every student with a loan wrote, called or e-mailed their representatives. One voice at a time does nothing. Thousands of messages complaining about this nonsense might, just might, get their attention.
Even the web sites purporting to be in opposition to this scam give nothing more than lip service to the issue.
Everyone is frightened by government. What they fail to realize is that we are the government. We need to stand up for our rights under God and the Constitution.
Sallie Mae takes money from my Social Security benefit every month with an “administrative garnishment”. It is an unconstitutional method of collecting fictitious debts.
We must do something to stop this fraud!
Loan forgiveness sounds like a bad idea. And it sends the wrong message. When one borrows money, he/she has an obligation to pay it back.
Why not just offer federal consolidation loans set at reasonable interest rates (1-3%). Personally, that would make my loans much more manageable.
Loan forgiveness is a scary concept, because like everything else, we are kept in the dark as to the real workings and intentions of the deal. As for myself, I am lost as to a solution. I am a doctor with loans of over $200,000. Now you may think – doctor – rich, but let me tell you that is so far from the truth. Next, to Sallie Mae, insurance companies are the biggest crooks in the world. I can’t get paid from Medicare or Blue Shield but maybe twice annually when they decide to and the pay scale is typically $26.00 per visit. This makes being a doctor a little less than lucrative if you actually spend any time caring for your patients. We live with less means than your average working couple due to the expense of running a practice, the current global financial market, and the theft by Big Insurance.
Sallie Mae loves to sell debt. That’s how they make over $96,000 on my loans over the last eight years of me working my tail off trying to serve to the best of my ability. They sell one education to about 30 different debt collectors all with new “you are a low life dead beat” fees and penalties all wishing you to auto debit $250.00 each from your bank account, monthly. If that isn’t hard enough you never get to the same person twice and when you do try to call and communicate you will most certainly end up speaking to someone in India. Given their current financial circumstance you can readily see how they may find it difficult to sympathize with me and my problems. They repeat the same helpless thing to you several times and then you hang up exhausted and discouraged. So the collection calls continue (Somehow, always someone from the U.S. – much more training involved in teaching someone to demean, scream, insult, and accuse – the language barrier would prove problematic).
I borrowed $100,000 to go to school for approximately nine years. (My husband borrowed $40,000). Today they are approximately $260,000. There was no way for me to anticipate the global financial problems we face today. Running a business is hard and costly and I cannot find a person alive who has any certain answers as to what we can do about our debt. $260,000 and no way to repay it. Bill collectors, who make a lot more money than doctors, will continue to harrass and illegally sell my personal information around the world, until I die I guess. If their was debtors prison we would be sitting in it. But, then again, we would probably get free food, cable and education. Everything is upside down. We need solutions. Perhaps, we need to place caps on collection activity, rates, fees, and penalties, create plans of repayment that are reasonable or at least possible, and fight back against the World Bank and these multi-national corporations that really own Salle Mae and everything else, who operate within our country illegally doing what ever they want. Now, doesn’t that sound reasonable?
All of this confusion about Student Loan forgiveness. The system is unfair. Why does someone has to repay for 30 or more years? The amount borrowed nearly doubles. This country is notorious for keeping people in boxes. Wanting to better my life should not take the rest of my life to pay. Yes there needs to be a change in the rates, length of time to pay, etc. As for those who think those who borrowed money for school should repay it, take a walk in our shoes. Obviously, they did not have to borrow to go to school.
First of all, see if you can compare the cost of your education with the cost you have NOW.
Negotiate to pay off the original cost sans fees and interest.
My loans are 36,000, but the cost of my education is 21,000. WTH? Interest, that’s why.
Interest that started accruing BEFORE I am in a position to pay them off. That is where the DOE makes their money, is the interest accrued, then added to principal. So, you are paying interest on the interest.
If you can find a way to pay the original amount and ONE year of interest without racking up more interest, let me know.
In the meantime, call a lawyer who specializes in student loans.
Again I find a pool of folks who find themselves in my boat.
in 1993 I borrowed $12k to attend college. During the first year, my wife was diagnosed with a disorder that required immediate attention. Consequently, I had to put my plans on hold and leave school to pay for her medical needs. I had to forebear on my loans for a few years, but started paying them back in the late ninties. Long story short, I have $16k in oustanding loans from the ballooned interest and my payments have just climbed to over $300/month and will contiue at such for the next 14 years. My wife is battling liver and pancreatic cancer, I just found out our daughter has a tumor at the base of her brain and my medical bills are climbing. If I stop payment on the student loans, my wages will be garnished. I feel totally screwed. There s no support fr folks in my Situation. On the books I make too much money, in reality, we are over extended. Loand 1994, payback 1998 – 2028. 30 years.. I will probably be dead before then.
Someone help! I have been out of school 13 yrs and am in default on student loans approx $16000. I have 4 children and only make $16500/yr. The collectors are killing me. I keep qualifying for a hardship, but never know from day to day if I will still qualify for the hardship the next time they request financial documents which is about every 6mo. I work in a low income school, but am not a teacher, only a secretary. I love my job and have worked hard at it for the past 6 yrs. I fear that this time I may not qualify for the hardship and have recently been in bad health and owe about $1000 in medical bills. I have no health care coverage. They keep talking about garnishing my wages for 15% of my disposable income, but how can I have disposable income when my wages are below poverty level? I don’t want to give up the job that I’ve worked so hard at. How can I get out of this loan debt? It seems to be running my life. I have literally gotten to the point where I am afraid to check my mail, answer my phone, or live a happy active life with my kids. I should be able to go outside and play with them, but instead I’m at home hiding from the world because I never know when what little bit of money I do make will suddenly be garnished. It’s not that I don’t want to repay the loan, I just can’t and there is no end in sight.
About forgiveness for teaching, only if your first loan was after Oct 1, 1998. My wife started school Aug 1, 1998, so she doesn’t qualify.
On income based repayment, only if you are single, or married filing separately, which means you get penalized heavily in taxes.
My wife is disabled, but still working part time, after doing 7 years of full time special education in an inner city school. Right now they have granted her a medical forbearance lasting one year, but since she is working part time, we can’t get a disability forgiveness. It’s a challenge, and I make too much for us to qualify if we file married filing jointly.
Buried in student loan debt for 12 years and owe with interest over $250,000 (most of which is interest) which I will never be able to repay and living paycheck to paycheck as it is. The promises of education was the biggest lie. I have an M.A. and teach college yet earn less than folks I know with little or no education. Those that I know who did not attend college and grad school have a much better life while I am buried in debt and near retirement. I still have children at home, and buy only things on sale if I can find them. Funny how I find myself jealous of people on welfare. HELP!!! Where’s that hope and change Obama? The rich and the poor are bailed out, but the MIDDLE-CLASS is forgotten.
My only real hope is death sad to say. College was never the answer. My parents as it turns out were right. I should have just got a job working in a factory protected by the U.A.W.
I just want to understand why there are not loan forgiveness programs for private loans. I never would have taken out the private loan if I had known the economy would have taken this turn. Does anyone know of any?
@Kelly the reason is because the term “private student loans” really is misleading. It is actually a consumer installment loan with a different label. It is as if you take out a loan from a bank and use if for business or other stuff… the same loan but different label.
I happen to work in public service and Obama’s plan does absolutely nothing for us. For that to be effective for us it would have to consider only the loan holder’s income. As it stands now, the plan takes into consideration the total household income to loan holders debt. That means that I have 90k income and 80k student loan debt which is off by 90K. My husband and I hold our Master’s degree and make 90K year total household income and our student loan debt is 170K. Obama’s plan does not take into consideration more than one loan holder per household. We have a very modest house, no cable, no extras, no vacations, literally check-to-check (with exception of basic cell service) and were forced to place our student loans in deferment. By Obama’s plan we would be paying 10% of total income which equates to $18,400 per year for all of our student loans. If we could pay $18,400 per year we would have our total debt paid before the 10 year forgiveness mark. Obama’s plan sounds all well and good until you actually look at the numbers. So much for helping the average Joe!
I’m worried that in the next few weeks my student loan payments restart after having been on forbearance due to hard ship. I still can not affor the $533 a month they want. I graduated in 1999 with a degree in Social Work. We all know that is not a lucrative field, however, to make matters worse, I haven’t been able to really work in that field, because I am not Bi-Lingual. I work for non profit agency with the DOL, however, am not paid much more than a highschool graduate or junior college level. DOL says I should be making 55000yr, but they don’t tell the company I work for that. I am single, children are grown, and still barely get by. I too wanna pay my loans, before I am too old or die. Which, I am 46 and that’s not all that far away. For me, it would be wonderful if someone said my loans would be forgiven, but not at the expense of others paying for it in some shape or form. Does anyone have any idea?
I read something recently that if you don’t pay your student loan, then an automatic 25% of your Social Security payment will be deducted each month until you die or the balance is paid off. I also read that bankruptcy doesn’t relieve you of student loan debt.
That’s what wrong with our country! Everyone thinks they can borrow money and not have to pay it back. Wow….what a concept! You KNOW when you take out a loan that you will have to pay it back WITH interest. If you have student loans, maybe you should have thought about your payments BEFORE purchasing a house that is probably way out of your financial means. And buying a flat screen TV and fancy furniture to put it in. Get a second job…pay off your debt. I have student loans as well, and am working making LESS than $30,00 and am making it just fine, becuase I know how to budget my money and not overspend. And I realize that what I borrow I will have to pay back. Cut up your credit cards, sell your fancy car and get one good enough to get you to work and to pick up the kids, and STOP borrowing money to buy useless crap that you don’t need. Stop eating out and start eating CHEAP meals at home. This country has the mentality that we “deserve” this and “deserve” that….if you can’t afford it you don’t deserve it! SAVE up to go to college, and to buy a car. I’m sure you have plenty of clothes in your closet too, and don’t need designer jeans and shoes. MAKE it work. Make a budget and STICK to it. All you people who expect your stupid mistakes of borrowing too much money that you can’t pay back expect the government to take care of you. NEWSFLASH! It ain’t gonna happen! And when they do help you out, it comes out of MY check that I work hard for and that I MAKE work in order to pay for what I NEED to live on, and what is left over goes into savings so I can retire and not be broke! Maybe you should think about that too. Dave Ramsey….look him up, and do what he says. Smart man. You don’t have to poor…it’s a mentality, and a choice. Stop being lazy and do what it takes to pay what you owe. Stop looking for someone else to bail you out. You got yourself where you are, pay the consequences!
Ashley, it is good to hear that there are some people left in the US that actually have your kind of integrity and financial discipline. Way to go, girl!
Ashley,
You’re compassionate tone makes me want to consider your advice… Not! I’d rather be financially undisciplined but loving and compassionate than to have all the money in the world and your unhappiness to go with it. What a shame.
For the rest of us who have made some mistakes and are trying to figure out how to make the best of them, keep thinking! I’m sure good ideas are out there somewhere
)
@ Ashley,
Obviously you are living in your own little world, something that you created that works for YOU! You are in NO position to stand on your SOAP BOX looking down at others that perhaps could not afford to go to college because they did not have RICH parents to send them, which was the case for me. DESPITE your narrow-minded thinking, everyone is not able to get 2 or 3 jobs perhaps because they have children or other responsibilities such as a sick parent, etc. that they have to tend to. You DONT know because you are not IN THEIR HOMES, IN THEIR SITUATION! I can’t stand people like you who want to look down on others, completely oblivious to what other people may be going through. Please understand that usually when people are in debt like this we HAVE ALREADY THOUGHT OF SEVERAL SOLUTIONS to get ourselves out of the mess, to no avail! NOONE ON THIS BOARD said that they did not want to pay back their loans, we all said we DID but didnt have the MEANS TO at the present moment and just needed a minute free of BILL COLLECTION CALLS in order to devise a reasonable plan! CONTRARY TO WHAT YOU THINK ASHLEY, we are not deadbeat, freeloaders, nor are we looking to escape paying back our loans. We are saying we can pay a low monthly payment but cant afford $500+/mo payments along with a $25000-32000 paycheck while paying for just BASIC LIVING EXPENSES. Not FANCY CARS, FANCY CLOTHES, ETC like you were preaching about. Get a life and go spew your acid, preachy speech somewhere eles, cause those of us who are sincerely trying DONT WANT TO HEAR IT!!!
I meant a $25000-$32000/yr paycheck
Well now… this was a very good discussion on what to do about student loans. Keep trying Whitehouse.com or whatever the official Presendential site is and keep asking him for solutions. I don’t think any of us took student loans hoping to not pay it back, or for ‘taxpayers’ to pay it back, however, I’m a taxpayer, and I have definitely contributed. Never been on welfare, I have single friends collecting disability who are no more disabled than I, others getting food stamps lying about income, most abusing the system– The student loan issue?
I have about $100k in student loans, divorced since my children were toddlers (no child support), have a masters degree, and a decent income, and won’t see the student loans paid off in my lifetime. I’m about $40k underpaid for my position. We were promised a different outcome when we signed up for these loans. I’m now making the same income as I did with no degree in year 2000 (Bill Clinton days), except now I have a masters, and 11 years of inflation have occurred. This is why the loans need to be forgiven, interest terminated, anything. My children are going to college and my debt level is 4x my income, because “This. Economy.”
Removing the student loans only gives us a chance to participate in life. I pay about $350 monthly toward my loans, of which about $30 goes toward principle. Hmmmmm….. That’s at 4%.
Forgive the interest, at least we have hope?
Leadfoot,
Feel your pain, I owe about $50k and like you will owe until I die. If I can get some help or small enough payments, that would be a great help. Like I said prior, I dont make a lot and just not sure where to go for help? Anybody w/ any ideas???
Sarah
An FYI for the author: This program was created under the George W. Bush administration via the College Cost Reduction and Access Act of 2007. This loan forgiveness program has NOTHING to do with the Obama administration.
Hi you all,
I’ve read all the comments and I guess we are all, more or less, in the same boat of despair.But, I was wondering… does anybody actually have any suggestions, referrals or insights on how to find concrete help?
I am in VA and I sit on 24 year old unsecured student loans which have ballooned from 19k to 89k
WOW!! I thought I was one of the few getting screwed by student loan companies to all those who say we shouldnt buy a big screen or car before going to school I just say this. I never have. I make 15020 a year. I had to start over after working 13 years in the electronics industry I never could get a good job. I was unemployed during that time a couple of times for periods of 6 months or longer. I developed a brain cyst and had to have that removed taking me out of the labor market for almost a year. I am not a freeloader and I dont believe most of the people you see here are either.The problem I think is predatory lending, When I took out my loans nobody explained to me the way they hit you with a new loan every semester so you think your only piling up one debt account and in reality you are piling up 9 or more.all of them nailing you at an interest rate not so bad when on one amount. but, when you have the same thing nailing you nine times over just a bit to much the payments were always I thought on the high side, I tried to work with my loan company but they were about as flexible as a railroad spike. It finally got to the point of pay my bills and my mortage( on my one bedroom 600 sq ft house) and feed myself or pay my student loans at more then twice what my mortgage runs I am in a flat jam Id love to pay my loans but at the moment your more likely to get blood from a stone
Hi
I don’t think so that the government immediately forgive the student loans fully. The Obama’s administration should take actionable steps to implement the policy to rotate its reputation.
regards
rabia
The limitation of the program is that nothing is free. If you borrow money, you should be expected to pay it back. You where not required to buy a house that would overextend your budget.
Anna, mesamike, you guys are being oppressed. School used to cost a month’s salary. While it’s still presented as the only way to financial freedom, school now costs ten times as much. Especially when you factor in how you have to start saving for your kids’ education earlier and earlier, and for most people it becomes a dilemma – do I save for my kids’ education or do I try to pay off my own education?…
I have some good info on my website, pythagoreanism.com, but I don’t have any personal stories like the ones you have. Comment on one of my posts get in touch with me, I’d love to learn more about your situation. Student lending is a huge scam, and we need to change this.
There is a new plan called the IBR (Income based re-payment). Depending on your gross pay and the amount of your student loan, one may qualify for a reduced monthly payment and the remainder forgiven after 25 years. I owe $86,000 with a current payment of $590 a month. I qualified for $310 a month under this plan.
I am in my early 40′s with two MA degrees. I am married and file separately (I’ll never join my income tax with my spouse – I don’t care what the fees are…if he decides to leave me – ever – I’m not carrying anything but my share of taxes and the clothes on my back).
I really feel for you guys on this board…espcially those with PRIVATE student loans. I had NO IDEA that Sallie Mae was considered a “private” lender….they are so HUGE! I always thought their loans were backed by the govt.
Had my parents not been teachers themselves…I would have probably fallen into the trap of going with a private lender. It just so happens that I always knew the government loans were the BEST loans. I had Wells Fargo….85k (I make $41k as a teacher – relatively new to the profession).
I started paying my loans back 2 years go at $475 a month. If I had kids….I’d be SUNK.
The new (Obama) loan doesn’t help as many people as I think it should. In my case….it did EXACTLY what Obama expected. A month ago, the government PAID OFF Wells Fargo ($85k)…rolled my 5% loan into the government loan….and dropped my monthly payment from $474 / month to ZERO!!! Yeah…ZERO!! And in 10 years….my loan will be forgiven.
There were MANY catches, however, that I could have been trapped in: Married…filing jointly (I’d have to have had my spouses income included at $80k a year)…if I had gone private lender vs. governmet lender….and if my loan had been originated I think a poster said above, before Oct. 1998. (I apologize if that date is wrong).
Because of my loan being reduced to ZERO (and it’s “re-evaluated” every year…and teachers….we’re only LOSING income!)….it has allowed me to literally have a savings account – for the first time I save $950 / month versus the meager $400 savings acount I’ve had. And if I had kids….I wouldn’t even have the $400.
The “ZERO” monthly owed balance also counts towards the 10 year payoff plan.
So the plan (Obama) student loan forgivenes program REALLY IS THERE…IT REALLY DOES WORK….but ONLY if you fall into a VERY, VERY narrow window of DATES…IRS filing status….and job position.
(P.S. While teacher forgiveness loans have existed in the past…they were ONLY good for teachers in poverty schools…in certain subjects….and pretty much eliminated 99.9% of the teaching population. In other words…it was a JOKE!).
Part I
I should add (to the note above) that I am on IBR (Income Based Repayment).
Part III
Should also add…if you are on Income Based or Income Contingent…there is NO tax due the IRS. But ONLY ONLY ONLY under THOSE TWO SPECIFIC Programs. I just got off the phone with my lender about this and you may call them for your own peace of mind…. Direct Consolidated Loans: 1-800-557-7392
ALL OTHER programs…however…regarding student loan forgiveness…ARE taxable. Upside…the taxes are STILL cheaper than if you had to pay the loan in full. So just plan on putting aside 30% or so for taxes…pay it monthly from your paycheck to the IRS and you will STILL be ahead.
Sallie Mae really has two separate sides – they broker federal loans and they issue private loans. When they broker federal loans, they borrow from the government funds, tack on their own interest (which is reasonable, though not necessarily at the rates they have chosen, nor with the associated fees), and then loan out money to consumers. This is what people mean by “backed by government funds”.
All of my loans were Federal Stafford loans, both subsidized and unsubsidized. I have nearly $60,000 in loans. Sallie Mae brokered the loans. I turn 35 this year, I’m married and I have two children. My mortgage payment on a falling-down farmhouse on 5 acres is $770 a month. My husband and I live too far from where we work (we work only 10 minutes apart from each other and carpool every day—the drive ONE WAY is 1.25 hours), but I live in Michigan and finding another job in -this state- right now is not feasible, nor is selling the house (which, again, is nowhere near the proverbial ‘McMansion’). As you might imagine, the cost of travel and our day-to-day expenses are prohibitive.
We were encouraged to go back to school when the economy went sour. Everyone said it was a great idea. The government was pushing it too. The promise was that when we graduated, we would have access to better means; we would be able to find higher paying jobs, pay back our debts and contribute to society. We were promised that the hard work (SIX YEARS it took me to get through school while working full time, married, and taking care of two children) would pay off, that our children would see it and break the cycle of poverty. It was a real winner of a pitch. Unfortunately, it wasn’t -true-.
I consolidated my loans as they were all federal loans and took a very lengthy, graduated repayment schedule. By the time I’m done paying, I will have paid in over $112,000. There is no way out of it. I have every intention of paying back every single dime, and I have made arrangements to sell a vehicle to get me started. My husband and I have discussed tapping the retirement plans and have agreed that if it comes to that, we’ll do it. I can make the payments. They’re kickin’ my butt, but I can make the payments. I don’t know how a single person can handle this. The assistance is needed. We were misled.
Maybe, we should pay our childern K-12 education first, (most states pay $1500-$2000 per child on average per year)to show the committment to thier own education for the future. Things would change on this front you would see that not middle school kids wouldn’t all have X-box, i-phones or the endless stream of mountain dew pumped in to their vains from mon and dad for free, they would at least have a damn pencil for class most of the time.
Then when someone wanted to go to a four year university to further thier education for someone who would be serious about contributing to socitey the federal government could step up and pay for thier new tax resource. This would also help the ones who are just starting out with thier life, instead of being swallow alive by a $110,000 student loan when your only making $36,000 a year with a carpayment, house payment and utillities, because you need to place to stay and live so you can drive to the job and work you ass off to pay the the student loan off for the next 20 years. I’m just saying somethings wrong here!!!
Look, here is the deal. The student loan scam is just that, a scam to take advantage of barely legal adults with loans that start accumulating interest income from the time they are taken out. They bank on the fact that we all see education as a way to prosperity, but they also bank on loaning to us freely to get us to bite the American bullet of starting our adult lives in debt. Keeping all of us in debt keeps us working and fuels the American corporate system. So, the trick is to keep everyone in debt and earning just enough to stay in debt. Honestly, the current administration should allow all student loans to be forgiven similar to the way he gave bailouts to “forgive” big business. Big business and corporate millionaires are the problem, not you and I who owe student loans.