Obama Student Loan Forgiveness is actually the William D. Ford Federal Direct Loan Program
If fact, there isn’t such a program as “Obama Forgiveness”, that is a nickname for the William D. Ford Direct Loan program which is the sole provider of government backed loans to students and parents. As many people have come to recognize Obama Student Loan Forgiveness through their schools, friends and neighbors, the nickname came about when President Obama’s administration, along with congress, passed the Health Care and Education Reconciliation Act of 2010. An important part of this program is that benefits provided were modified to assist Federal loan holders exclusively, while private loans do not qualify for any of the benefits discussed and reviewed below.
There were 3 primary changes introduced by President Obama.
- The Federal Government will no longer provide subsidies (benefits) to private (banks & credit unions) lending institutions. Individuals with loans not with the Federal government, will not qualify for Obama Student Loan Forgiveness benefits. If you are not sure about if your loans are Federal or Private, we can help you determine who supplied your loans.
- Borrowers of new loans starting in 2014 will qualify to have their monthly payments capped at 10% of their discretionary income, rather than the previous 15%.
- New borrowers will also be eligible for forgiveness after 20 years of qualified payments rather than the previous 25 year threshold
In this program, borrowers are able to Consolidate their loans into one single loan. It is this Consolidated loan, where there are many benefits available to borrowers through alternative repayments programs offering lower payments and possible loan forgiveness.