Last fall when President Obama announced his plan to ease student loan burdens, it meant that student borrowers who have made their monthly student loan payments for a period of at least 20 years after leaving college may be eligible to have the remaining balance forgiven – and for those who have worked for at least ten years in public service positions, their loans may be forgiven once they reach their ten year anniversary of public service employment.
In addition, due to the fact that recent grads are not making the kind of money that was available to them several years ago, Obama’ program also calls for the capping of monthly student loan payments at ten percent of a student borrower’ take home pay.
For those who are members of the military, there is also some good news. Anyone who works for any of the five branches of the service and who also possesses a college degree may be able to also obtain forgiveness of their student loans.
Why This Is Important Today
Anyone who has ever taken on a student loan is well aware that this obligation can become a huge burden – especially for those who are not obtaining immediate employment upon graduation.
Years ago, it was easier for those who had their pick of post-graduation jobs to segue their student loan repayments into their other living expense budgets. Today, however, things have changed a great deal and even the smallest of expenses can become a big deal for those who are unemployed or even underemployed.
What Does This Mean for Student Borrowers?
In today’ economy, many people could breathe easier by saving even just a couple hundred dollars per month on expenses – and this is exactly what this program aims to do. According to the President, even though the student loan forgiveness plan doesn’t actually create jobs or even help in boosting the economy, it will make a big difference to millions of people who are having to make the decision every month regarding which bills to pay and which to hold off on.
For those who may not fall into any of the above categories, there is another possible option available in the student loan forgiveness program. This is to sign up for income based repayment loan terms.
The good news here is that this may be available not just to those with newer loans but also older loans as well. In any case, it is a good idea to compare the type of loan possessed with the best repayment and / or forgiveness option that is available to that particular borrower.
The Bottom Line
The bottom line on President Obama’ plan is to help ensure that those who choose to continue their education beyond high school do not end up broke because of the financing that is required in order to obtain that education.
When it’ all been said and done, even though President Obama may be remembered for his health care reform, the Student Loan Forgiveness Program will likely have affected a far larger number of people overall.
George Gallagher is a writer and blogger for the financial sector of the web. He is also a consultant to graduates concerning their student loan consolidation needs.