About the Obama Student Loans Program
In July of 2010, President Obama signed the Reconciliation Bill into law, which enacted a series of student loan reforms. What has become known as the Obama Student Loans reform has already made an impact on the affordability of higher education through federal aid, and will continue to do so. When the bill was signed, the Obama Student Loans program ended the bank-based lending of federal student loans. Additionally, the Obama Student Loans program mandated that all federal loans will be disbursed through the Direct Loan Program, with the Department of Education functioning as the lender, as opposed to a third-party lender as in years past. Perhaps the most important part of the Obama student loans program is the capping of student loan payments: for all student loan borrowers, payments will be capped at 10% of their income, lowering the total burden of debt on recent graduates by as much as $1.5b. The last phase of the Obama student loans program will be implemented in 2014, when the Pell Grant program will receive additional funding.
Loans Covered by the Obama Student Loans Program
The focus of the Obama Student Loans program is to bring relief to students in debt, but the program applies to federal student loans only. If a student or family has taken out a private student loan from a private lender, the Obama Student Loans program does not cover them.
Repayment and the Obama Student Loans Program
This is the really important part, so we'll go over it again: through the Obama Student Loans program, student loan payments are reduced to 10% of the borrower's income. This allows for a greater degree of financial flexibility and freedom, and can keep students from entering into debt as a result of having to scrape to make payments on their loans.
Repayment periods and the Obama Student Loans Program
Under the Obama Student Loans program, the forgiveness period on student loans has been reduced from 25 to 20 years, meaning that if a student successfully and continually makes payments on his or her loans for 20 years, the government will forgive the rest of the payments. Additionally, students who pursue careers in public service positions can receive another 10-year forgiveness benefit, meaning their repayment period under the Obama student loans program would be reduced to 10 years, assuming regular payments are made.
Q:How has the Obama school loans program affected me if I have taken out private student loans?
A:The Obama school loans program has taken care of the students who have borrowed loans through the federal financial aid program only. Students with private student loans remain unaffected. Since federal financial aid is offered to students who have demonstrated financial need, so accommodations were made to assist those who are suffering from financial constraints the most.
Q:What are the benefits of the Obama college loans program?
A:The Obama college loans program supports students with federal financial aid burdens. According to this program, students who have federal student loan debt receive a concession of 10% of their total earnings at the time of loan repayment. Moreover, students who are making timely payments and have loan programs extended to more than 20 years will only be required to pay the loan for the initial 20 years of the loan repayment schedule, as opposed to the previous standard of 25 years. Furthermore, students who get degrees in public services will be absolved of their loan payments after 10 years of regular repayment.
Q:Who benefits from the Obama financial aid college program?
A:The Obama financial aid program is helping students who are receiving federal financial aid. Private student loans are unaffected by these policy changes. Every student enrolled in a college or university within the United States on federal financial aid has benefited from the program and will continue to do so.