What does Obama's student loan forgiveness plan do? How can it help me if I'm currently struggling to pay back my student loans?

Does it also apply to graduate or professional school loans?

Answers

M. Erez Kats, Seattle Language Arts Teacher

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Most loan forgiveness programs can save you a lot of money, but you HAVE to realize that you are required to pay your full principal balance with interest for a very long time before the forgiveness kicks in. They don't just forgive an amount of your loans. You are typically required to make regular payments every month for say 10 YEARS or so. At that point, if you still have half your balance left (and you probably still will), they will forgive the rest of it. As far as I know this is how these programs are set up. You always have to pay first for a long time before they forgive anything. Fellowships, scholarships and grants are the only things that are going to give you money up front to remove from tuition,etc.

Amanda Morris, College Professor, Writer, Advisor, Writing Coach

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Oh, student loans. I completely understand your plight and your desire to make your loan payback more affordable. If you have federal student loans, your "Pay as You Earn" options have now been expanded under President Obama's plan. This means that more people are now eligible to pay as they earn, with monthly payments capped at 10 percent of the borrower's disposable income (and the balance is forgiven after 20 years). Something else that might help is to consolidate all of your loans under the federal government program, which means they will use that total amount to calculate an Income-Based Repayment amount, and will give you a much lower interest rate than you probably have currently.

Here is a great article at US News for more information and details.

And here is a page on the Federal Student Aid site about situations that qualify for student loan forgiveness.

At the very least, you should consolidate your loans with the federal government to take advantage of lower interest rates and a wider range of repayment options.

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