How can Obama Loan Forgiveness & Discharge help Students in 2020?

Loan forgiveness is a program that relieves students from all loans taken while schooling. Most students from poor homes and average homes spend up to thirty years of their post-grad life paying debts. Well, this article is written to aid relieve your loan paying stress with the Obama Loan Forgiveness and Discharge program.

The Federal Government makes it possible for every student to attain a higher institution. Basically, financial constraint is restrained from being a reason not to attend college. Unlike a scholarship, the federal Government grants repayable loans to students.

However, these loans must be repaid within a few years once you start earning as a graduate. Trust me, repaying these loans can be quite draining. Especially, if you do not get a good job initially.

In this regard, some agencies and even the Federal Government also grants palliatives that release you from the obligation of repaying these loans. While this is applaudable, there are so many eligibility criteria to meet.

Hence, this article on How Obama Loan Forgiveness can help you in 2020.

Take a glance at the table of content below to ascertain what is embedded in this article.

What is Obama Loan Forgiveness?

Obama Student Loan Forgiveness is an after-mat of the Health care and Education Reconciliation Act of 2010 signed by President Barack Obama. It is a loan repayment program that gives borrowers an opportunity to more loan repayment options.

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The goal was to simply keep student loan debt manageable and then forgive remaining balance if certain requirements are met by a debtor.

President Obama is known across the globe as one who champions giving help to people who need it. This particular program was initiated to help relieve the burden of student loan debt.

Popularly called the Pay as You Earn Program, this student loan forgiveness act was initiated by President Barack Obama. Even though it was established as a repayment program, it has a student loan forgiveness option at the end.

How does Obama Loan Forgiveness Act Work?

The Obama loan forgiveness program was originally established as an easier loan repayment program. Basically, this was signed into law to help reduce the burden of student loan repayment. However, it has a forgiveness program that relieves the student of the debt totally.

This program is not available to student with federal loans. Hence, only students who qualify benefit from this loan forgiveness act after their completion of 240 payments.

The Loan forgiveness act signed into a bill by Obama works effectively yearly. First, students must first ascertain their eligibility status. Once they are eligible, they will simply call their lender and ask to be enrolled in the PAYE program.

Moving forward, you will be asked to provide your tax returns for the previous year. You will also provide pay stubs for this year. Once you are done sending in these requirements, you may have to wait for 60-90 days, it takes that long to get your data processed.

From the documents you submitted, the Department of education will first calculate a Discretionary Income for you. This is simply a formula that considers your family size and income tax returns.

With PAYE program, your student loan repayment will not exceed 10% of your discretionary income.

You simply need to call your lender and ask to be enrolled in the PAYE Program (Make sure you say Pay As You Earn and NOT Obama Student Loan Forgiveness). In order to set up the program, you will need to provide your tax returns for the previous year and pay stubs from this year. It will typically take 60-90 days to process your application.

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In summary, the PAYE Program offers those with qualifying federal student loans under financial hardship the ability to repay student loans made before October 1, 2007 – as well as disbursed or consolidated loans made on or after October 1, 2011 – at 10 percent of discretionary income.

Who is qualified for the Obama Student Loan Forgiveness Program?

The basic eligibility to fulfill the Obama forgives student debt program is that you have an active federal loan repayment plan. Basically, only individuals with a student with federal loans qualify for this repayment plan.

Once you qualify, the student Loan Forgiveness & Student Loan Discharge can both clear students of loan responsibility. 

However, you must pay monthly a total sum of 10% of your discretion income for at least 20 years. Luckily, you may get the remaining balance forgiven.

In a nutshell, to qualify, register for the PAYE repayment program, pay 10 percent of your discretionary income for at least 20 years. Then, you may have your student debt forgiven by the Obama Loan Forgiveness program.

In a nutshell, to be eligible for the Obama forgives Students debt program, you must fulfill the following :

  • You must have Direct student loans issued on or after October 1st, 2011.
  • You must have no Direct or FEEL Program loan debt that was still in repayment when your new loan was issued.
  • It must be a federal loan
  • You must choose the PAYE as a repayment plan.
  • You must pay 10% of your discretionary income for 20 years to be eligible
  • You must not default in your debt payment.

How do I Apply For Obama Loan forgiveness Act 2020?

Well, you cannot apply for the loan forgiveness program. This is exclusively left for individuals who are working with the PAYE repayment program. You can only apply for the updated PAYE repayment program.

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The loan forgiveness is available to people who have paid their 10 percent discretionary income for 20 years. This will probably be due in 2021, hence, there is no application procedure yet for the Obam Loan Forgiveness program. However, you should contact your lender and request to be registered with the PAYE.

If you are eligible, then you should proceed to complete the online form for Income Based /Pay A You Earn /Income-Contingent repayment plan request.

Also, this is one of the so many options to get loan forgiveness, you should also consider a scholarship to pay off your debts.

How Long will PAYE Program Last?

This new act signed into law by President Obama may last a long time. While the repayment program is currently up and running. Students can easily choose it as there repayment option. However, the first qualifiers for loan forgiveness will be due in 2031.

By 2031, all borrowers who have ardently paid up their 10 percent discretionary income for 20 years will have their balance forgiven.

So, this program may last as long as the bill is still intact. Only a review or a presidential order can upturn this. However, if President Trump does decide to change Federal student loan forgiveness laws, and he does repeal Obama loan forgiveness.

Then, the new program would allow anyone who already has student loan debt to be “grandfathered” into Obama loan forgiveness, and still qualify for the PSLF benefit (forgiveness at just 10 years).

At the end of the day it is a win win situation for all students in the PAYE repayment option.

How Obama Loan Forgiveness Program can Help You in 2020

The Obama Loan Forgiveness program can be of great help to you this year 2020 in multiple ways. In fact, you should immediately place that call to your lender to enroll for the PAYE program immediately.

What Do I Really Need As A College Students

At this point, I will now itemize all the possibilities all the help you can get from this plan this year:

Qualify for Complete Forgiveness Paying $0

Yes, as impossible as it sounds, this Loan Forgiveness program under the guise of the PAYE repayment option can help you achieve this. It is important to note that your monthly payment is calculated based on your monthly income.

Hence, if you are currently not working, or have no monthly income, then, your monthly payment will be $0.

This vicious year that may see so many loose their jobs following the pandemic, may actually be of help in your loan repayment plan.

Basically, if you stay without income for 20 years and monthly payment is $0 dollars for 240 months, you will still qualify for loan discharge and forgiveness. So, you can worry about how to feed for now till you get a monthly income.

You will pay only 10% of your discretionary income

The PAYE puts into consideration your total income in a month. Not only that, it allows you pay only 10 percent of your discretionary income.

By discretionary income, this means you will pay only 10 percent of what is left after the deduction of taxes, social security charges, and basic living costs.

This means in 2020, after removing you monthly expenses for basic life needs, you may pay for our student loan. This is quite interesting and an easier burden to bear. Hence, the Obama forgives student loan program can help you exceedingly this 2020.

You will Qualify for Loan Forgiveness soon if you Enroll now.

Yes, the PAYE is actually a student loan repayment option. However, students who have paid their debts consecutively for 240 months may have their loan balance forgiven.

So, if you enroll now, your loan forgiveness period will start ticking. Interestingly, your previous loan repayment will still be valid. This is just a better plan for you to pay your debt and still be at peace with you.

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Obama Loan Forgiveness FAQs

Is PAYE a Loan repayment Program or Loan Forgiveness Program?

The Obama Loan forgiveness program was first established as a student loan repayment option. However, it has a loan forgiveness option for qualified individuals.

Do student loans go away after 7 years?

Typically, private student loans will fall off a report after 7.5 years. This starts counting from the day a debtor misses his payments. For federal loans, the time is actually 7 years from the date of default OR from the date the loan is transferred from a FFEL guarantor to the Department of Education

When was Obama loan Forgiveness Act Pass?

The Obama Loan Forgiveness Act was signed into law in 2010.

Where Do I get Obama Student Loan Forgiveness Program?

Simply call your lender and ask to be registered with PAYE (Pay As You Earn Program).

How Much is Obama Student Loan Forgiveness Program?

There is no specific amount for the forgiveness program. Basically, the Program which is popularly known as PAYE allows you to pay 10% or less of Discretionary Income for 20 years.


The goodwill of the federal government to allow everyone who wants to go school some financial assistance is commendable. Also, they understand the financial burden that comes with repaying these loans every day, month, or year.

Hence, new laws and acts are considered to reduce this burden. The Obama Loan Forgiveness Program is one of such acts of goodwill. This repayment plan allows you to earn forgiveness after some years if your are eligible.

In addition to that, it also makes room for you to earn money, pay your bills, and still pay your loan without being totally broke for the month. It does this by only accepting 10 percent of your discretionary income.

This is actually an act of goodwill with some scent of kindness. One, that must not slip you by. So, quickly read this article, ascertain your eligibility and place that call to your lender immediately.




Read From Original Source Here: World Scholarship Forum

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