Year in year out, students who finance their college fees through educational loans often find themselves struggling under debts after they graduate. With current loan repayment plans taking huge chunks out of monthly salaries and the economy performing at its worst, the cost of shouldering college education has lately become unbearable to a good number of ordinary Americans. The newly introduced Obama Student Loan Forgiveness Program is seen by many as a timely gift that would not have come at a better time.
Obama student loan consists of important reforms that are aimed at helping college students to complete their education without worrying about their future financial stability.
So, what does the Obama student loan forgiveness plan entail? The details are discussed below.
The Obama student loan forgiveness deal is designed to lessen the weight of debt to graduates under specific conditions. Although this ‘grand plan’ promises considerable support to loan beneficiaries, it is only available to those scholars who have benefited from Grad Plus, federal Stafford or Perkins loans.
Beneficiaries of private loan schemes are the unfortunate lot in this new pay plan as the program only caters for state and federal loans.
Loan repayment percentage
The Obama plan reduces the average monthly payment from fifteen percent to a manageable rate of 10 percent out of one’s discretionary income. Discretionary income is a term that is used to refer to the amount of money that remains after paying for basic necessities and taxes. The 10% cap is basically aimed at helping students to save and survive the current economic times.
Before the Obama scheme was introduced, the forgiveness period stood at 25 years. This meant that one had to re-pay his loans consistently for 25 years before being forgiven by the government. President Obama’s deal has since reduced the forgiveness period to 20 years thus making life much better for college graduates.
Benefits for public servants
Under this loan program, graduates who join the public sector benefit from another 10 years reduction in loan forgiveness periods. Public servants get an opportunity to end their student loan debt within 10 years.
Since time immemorial, education has been (and still is) a sound investment. With our economy now limping and unemployment levels hitting all time high levels, the average man’s sons and daughters are faced with a huge burden and a quite a few are beginning to question the ideologies of the very education which forced them to take the loans. However, with the newly launched Obama student loan support program, prospective graduates can now afford to smile.
Well, there has been a heated debate on the merits and demerits of this plan but one thing is evident-college graduates can now afford to repay their loans without having to drain their wallets and starving themselves to death.
As the president succinctly said in his speech, no US citizen should endanger his financial future because they went to college.
There is no doubt that the Obama student loan forgiveness program is the most reasonable plan to take while looking to repay your student loan in the current times