How Obama’sidea gave boost

to the Direct Loan Program

with Forgiveness

Schemes

The student loan forgiveness

program has earned popular

nickname from the borrowers.

Owing to President Barrack

Obama’s stupendous efforts in

making higher education easy and

affordable, the Direct Loan program

is now called as Obama Student

Debt Forgiveness program. It is

worth mentioning that the Direct

Loan program actually derives its

origin from William D Ford, who

transformed the scene of American

education.

The direct loan program was

restructured in the year 2009 to

accommodate new ideas and

loan benefits. The Obama

Student Debt Forgiveness was

first included in the Health Care

and Education Reconciliation

Act of 2010 which covers all

federal student loans. The

private loan borrowers remain

eluded from enjoying the

benefits of the student loan

forgiveness program.

Features of Revised Direct Loan program

The student loan forgiveness program that is available today

boasts of incredible features considering the highly fluid set-up

of the education system in USA.

1. Student loans will not attract any more subsidies from the

federal agencies.

2. The private lending institutions offering federally-backed loans

won’t be able to ask for any subsidies from the federal

government.

3. The forgiveness program began from 2014. The borrowers

who new loans form the 2014 portfolio can make repayments

based on the restructured student loan forgiveness program.

4. The repayments will be equated to the discretionary income set at

10 percent.

5.New borrowers will enjoy shorter eligibility term. The student loan

forgiveness is now reduced after 20 years of repayment on the

qualifying loan payments instead of the earlier term of 25-years.

6.The repayment amount is now directed to fund poor communities

who don’t have access to education. It has definitely been designed

to raise the volume of college funding without putting pressure on

state funds.

Modes of making payment in a Direct Loan Program

Borrowers can now enjoy a more defined and affordable modes of

loan repayment. The borrowers can derive benefits from the student

loan forgiveness program with the option of consolidation of all

federal student loans into on single loan. The student loan

forgiveness program offers fourdiversified loan repayment plans.

-Standard Repayment: Choose the standard

option to pay a fix sum every month till the loan

term stands. The amount to be paid every

month is deduced from the loan sum and

interest rate.

-Graduated Repayment: This mode of

repayment is a progressive structure that allows

the borrower to make higher payments with

time. The repayment sum beings with a small

amount usually lower than the standard

repayment value. The amount remains constant

for the first few years before gradually

increasing thereon every two years.

The forgiveness amount can save millions of dollars in the first few

years for students with a normalized, affordable interest rate.

-Income Contingent(ICR): The

borrower can enjoy repayment with

income-linked mode called as ICR.

The value of loan repayment is also

based on the family size and number

of dependent members. Borrowers can

begin with zero.

-Pay-As-You-Earn: PAYE offers the

borrower the lowest monthly loan

repayment based on the income.

Instead of the 15 per cent IBR rate,

PAYE is equated as 10 per cent of the

discretionary income.

Student Debt Center

Cesar Buitrago

Address - 18459 Pines Boulevard, Suite 532,

Pembroke Pines, FL 33029

Contact No. - 800-551-7187

Email Id - info@studentdebtcenter.org

Website - http://studentdebtcenter.org/