Student Loan Forgiveness Program
It is an unfortunate quirk of modern times, but news spreads remarkably quickly, especially the parts that people want to hear. While it is nice to know that news is seldom as horrible as the media makes it sound, it is also true that things are seldom as positive as they sound. If you have student loans and have heard that all student loans were recently forgiven, hopefully, you already knew to be very skeptical. Before you go skipping a payment, you need to understand exactly what loans are affected and which of those Student Loans Program Chart qualify. The truth is that Obama’s recent changes are not a cure-all; it’s more like an assistance program.What President Obama established was a payment program known as PAYE (Pay As You Earn). The primary purpose of this program is to allow those who have recently graduated to get established before having to deal with repaying their loans. Here is what you need to know.
The following will give you a quick look at what the program does.- Provides a monthly cap of 10% of the graduate’s discretionary spending for the student loan payment, but not more than the standard 10-year amount.- The program applies to most federal Top Student Loan Providers. It excludes Direct or FEEL PLUS loans, which involve the graduate’s parents, and private loans.- The life of the student loan is extended to 20 years.- Once the term of the debt is up, the rest of the loan is forgiven.- Currently, it only applies to student loans that were taken out after October 1, 2007. The expectation is that the timeline will be expanded to include more debts in 2015.- There are financial hardship requirements that have to be met. Visit the government calculator to see if you meet the required financial hardship to qualify for the program.
Is There a Catch?
As with any program, there is always something that slightly spoils the deal. The program primarily only applies to people who incurred a considerable amount of debt and now earn very small salaries. There is speculation as to how many people will actually benefit from the Graduate Loan Application program. Some, like the New York Times, seems to think it will only benefit those who have six-figure loans. Take the time to figure out if you qualify by using the government calculator.Once the 20 years is over, the remaining balance will be forgiven; however, the remaining balance counts as taxable income.
What to Keep in Mind
The possible problems may make you think twice about trying to get into the PAYE program. You should remember that you are not obligated to stay in the Private Student Loan Options program. It is primarily meant to help new graduates in tough situations. Once you find your financial footing, you can switch to another program, such as debt consolidation or seek help from other debt forgiveness programs. If you have federal loans, you will be able to easily make the transition with the Direct Student Consolidation Loan.