What are the Benefits of the Obama Loan Forgiveness Program?

 If you availed of a student loan to finance your college education and you are still paying it, then, President Obama has great news for you.  Under the obama loan forgiveness program the amount of loan you are to pay originally has been reduced considerably or even forgiven altogether.

The obama loan forgiveness program is really nickname for the Federal Direct Loan Program. A part of the program was amended by President Obama in year 2010, hence the nickname.  The amendment introduced several changes that are favorable to former students with loan balances to pay and current students planning to take out loans.

The benefits that past borrowers will enjoy under the Obama reform of the Federal Direct Loan Program include the opportunity to consolidate all existing student loans into a single loan.  After consolidation, borrowers can choose from a number of payment schemes all designed to make paying much easier.  These schemes include the Standard Repayment, Graduated Repayment, Income Contingent (ICR), Income Based (IBR), and the Pay as You Earn (PAYE). The last scheme, PAYE, is the most advantageous scheme for borrowers since it requires the lowest monthly payment.

The original payment period of loans is usually 20 to 25 years.  Under the Obama amendment any balance borrowers have after 20 years of payment is forgiven. Those who are working in public sector can apply for the Public Service Loan Forgiveness program which forgives remaining loan balance after paying for ten years.  You can also learn more about Obama loan forgiveness program by checking out the post at http://www.huffingtonpost.com/news/public-service-loan-forgiveness/ .

The Obama amendment allows new borrowers to base their monthly repayment amount on 10 percent of their total discretionary income instead of on the original 15 percent.  They will also be able to apply for student loan forgiveness after twenty years on qualifying payments. Moreover payments will be utilized to help minority and destitute students and improve college funding.

The main objective of the obama loan forgiveness program is to make it easier for people who took advantage of the student loans in past to pay for said loans. It is also meant to help new borrowers. 

Billions are owed to the Federal Direct Loan Program. If you are one the many borrowers who still have unpaid student loan, find out how much you will save by applying for obama program now. It is even possible that after years of paying you really do not have to pay anymore.