What exactly is the Obama Student Loan Forgiveness Program?
Well, what became known as the ‘Obama Student Loan Forgiveness Program’ is actually a nickname for the changes he made to the US government’s ‘Federal Direct Loan Program.’ The ‘Obama Student Loan Forgiveness’ is a program that’s officially named the ‘William D. Ford Direct Loan program’, but most people know this program only by its nickname.
This name was born when in 2010 President Obama was reforming several elements of the Federal Direct Loan program when he signed the Health Care and Education Reconciliation Act. Please bear in mind that this only refers to programs that include federal student loans. Students that have private loans can not benefit from the information presented here.
President Obama made (among others) the following changes:
- The federal government stopped giving subsidies to private lenders for loans that are federally backed.
- From 2014 on, new borrowers may qualify to repay loans based on 10 percent of their discretionary earnings.
- From 2014 on, the term after which new borrowers may qualify for student loan forgiveness is lowered from 25 to 20 years.
- Federal funds are used to support minority students and to increase funding of colleges.
Some benefits of the Obama Student Loan Forgiveness Program: