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Your Federal Student Loan: Forgiven
If you’re looking for a student loan forgiveness program for your student debt, you might be interested in what is known as Obama student loan forgiveness. This is not just a single Obama student loan forgiveness program, but a collection of government programs people can use in concert to have their student loan debt reduced or cancelled, unofficially nicknamed Obama student loan forgiveness or Obama debt forgiveness.
Starting in 2010 the Obama administration changed the rules for federal student debt repayment, reducing the amount of time from which a student loan can be forgiven if certain conditions are met.
For example, a federal student loan borrowed in 2014 can qualify for repayment based on 10% of the borrower’s discretionary income, technically reducing the amount of money repaid. In the Obama student loan forgiveness program this is known as Income-Based Repayment or IBR. New borrowers are also eligible for debt forgiveness after 20 years instead of the 25 years it would take before federal debt forgiveness was reformed. This essentially means, when using both programs, people can pay less now, and after 20 years pay nothing.
Another combination of programs for student debt forgiveness is an IBR plan with the Public Service Loan Forgiveness program. This cancels a student’s debt after just 10 years if the student works in the public sector during that time. That means working for a government agency at the federal, state, local or tribal level; working as a teacher for a public school; or working for qualifying non-profit organizations. Under Obama debt forgiveness you can pay 10% of your discretionary income for 10 years and after that the rest of your student debt can be forgiven. Many students are already applying for these programs according to data released by the Department of Education.
In summary, the Obama student loan forgiveness solution is not a specific student loan forgiveness program, but a combination of repayment programs for federal student loans that can be used to reduce and ultimately forgive a portion of student debt.
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