How to get Student Loan Forgiveness: 4 Things that nobody told you

In the USA, only 40% of the student loan borrowers are eligible for some or the other type of loan forgiveness. However, out of this percentage only 10% borrowers actually take advantage of the forgiveness schemes. Each year, millions of students pass out of the campus with an average loan debt of $22,500 or more. Hoping to get a well-paying stable job makes most student loan borrowers seek opportunities in the private enterprises. However, this may not be the best thing to do, especially when there is a heavy competition in the private sector.

Keeping in view that many schools and colleges run by the government require quality teachers and professors, the Obama Loan Forgiveness scheme comes as a handy financial aid.

We bring you 4 features about the Obama Loan Forgiveness program that most borrowers find to be “misleading”.

1. Obama Loan Forgiveness is applicable to Federal Loan Borrowers only

Thus far, only federal loan borrowers of graduate federal loans are eligible for entry into the Obama Student Loan Forgiveness program. The loan is taken from the school enlisted by the federal government and the education department to support the students attending a particular curriculum.

In case the student drops out of the classroom, or fails to complete the course, the debt against that student is borne by the school. However, the student borrower is labeled as a delinquent and disqualified from seeking any further financial aid from the federal institutions.

2. Is forgiveness really possible?

Obama Loan Forgiveness scheme seems to be working well thus far, especially as it is linked with the existing Public Service Loan Forgiveness and NURSE Forgiveness programs. Moreover, public officials who have federal loans are offered extensive incentives for continuing with their professions, serving the community.

For instance, a teacher with 5-year experience in the profession, and currently engaged in teaching students from low-income or no-income families can earn forgiveness of up to $17,500 per year. By the 5th year, most of the debt is either paid away in the form of graduated incentives linked to the federal loan, or provided Grants/sponsorship to pursue further education.

3. Forgiveness will arrive from 2017-2018

The first set of qualified borrowers under the Obama Loan Forgiveness would be granted waivers after October 1, 2017.

The strict condition is that the borrowers should have repaid their monthly interests diligently for 120 months.

4. Will the FFEL Program borrowers be considered?

The Federal Family Education Loan program is second-most popular education funding scheme after the Direct Loans. Launched in 1965, the FFEL was permanently terminated in June 2010. Thus, Obama Loan forgiveness is not applicable for the borrowers. However, if the FFEL Program is consolidated with Direct Consolidation Loan, the borrower can apply for the forgiveness as per the PSLF regulations.

Only the repayments made after consolidation would be counted in PSLF, no matter how much you have repaid earlier.

Thus, you should always consider consolidating the student loans with the Federal Direct loans to earn maximum returns.