Will Obama forgive student loans?

Parents Forum
1

<p>I heard all student loans will be forgiven after 20 years or 10 years if you do public services? Also only 10% of your salary has to go to your loans? Is this true?</p>

2

<p>That was something that he mentioned during the state of the union addressed. It was just talk. Nothing has been passed, and won’t likely be.</p>

3

<p>[Exploiting</a> the New Student-Loan Rules - WSJ.com](<a href=“Exploiting the New Student-Loan Rules - WSJ”>Exploiting the New Student-Loan Rules - WSJ)</p>

4

<p>Income based repayment (IBR) is already available for federal loans and payments are a maximum of 15% of income. Currently loan forgiveness is available after 25 years. Legislation has passed that will reduce the IBR cap to 10% in 2014 (for new loans issued after that). Income contingent repayment (ICR) has been available for some time now.</p>

<p>Public service debt forgiveness is an option after a borrower who has worked for a school, government, or non-profit entity for at least 10 years (and can document this service!) and who will have made at least 120 on-time payments since October '07. Note that under a traditional payment plan there would be nothing left to forgive, but if payments were made under IBR/ICR there may still be a balance. I believe that only federal direct student (ie. Stafford and Grad Plus) loans qualify for forgiveness, but Perkins and FFEL loans could be consolidated into a direct loan and become eligible. No defaulted loans qualify for forgiveness. </p>

<p>Here are links to the federal Q&A sites which will explain these programs better. Finaid.org’s calculators include IBR/ICR payment models.</p>

<p><a href=“http://studentaid.ed.gov/students/attachments/siteresources/IBRQ&A_template_123109_FINAL.pdf[/url]”>http://studentaid.ed.gov/students/attachments/siteresources/IBRQ&A_template_123109_FINAL.pdf&lt;/a&gt;
<a href=“http://studentaid.ed.gov/students/attachments/siteresources/PSLF_QAs_final_02%2012%2010.pdf[/url]”>http://studentaid.ed.gov/students/attachments/siteresources/PSLF_QAs_final_02%2012%2010.pdf&lt;/a&gt;&lt;/p&gt;

<p>This site also provides a fairly detailed comparison of the three payment plans:
[Student</a> Loan Borrower Assistance Repayment Plans](<a href=“http://www.studentloanborrowerassistance.org/repayment/repayment-plans/]Student”>Repaying Private Student Loans - Student Loan Borrowers Assistance)</p>