President Obama’s student loan debt relief plan goes into effect early

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Graduate students received financial assistance from President Obama’s student loan debt relief plan last month. Originally, this was supposed to take place on Jan. 2014, but in the midst of the tuition and loan crisis students will see their financial loans lessen this year.

In a public address to university grad students Obama said that over the past three decades the cost of college has nearly tripled for students and last year graduates, who took out loans, left college owing an average of $24,000.

Student loan debt has surpassed credit card debt for the first time ever, according to a report from CBS.

Income-based loans

Obama’s student loan relief plan will be split into two measures, the first one being a special loan repayment program based on income that aims to help struggling graduates.

Former grad students had to pay 15 percent of their monthly income to their loans and debt were forgiven after 25 years. Now, students only have to pay 10 percent of their income to loans and debt will be forgiven after 20 years – resulting in lower monthly payments, according to the White House’s report.

“The question to ask is whether the graduate degree will increase their income by enough to allow them to make payments on their loans,” said Shirley Svorny, CSUN economics professor. “Only make an investment (in loans)  if the expected return covers the cost.”

Joyce Smith, a graduate student, who earned her bachelor’s degree in business management from National University in 2011, will be attending CSUN master’s program in the fall.

“I owe $30,000 in my loans from my undergraduate degree alone. My advice to students who are college bound or students attending college currently is to take the loans that you can afford to pay back,” she said. “Don’t take out private loans from banks because the interest rates are very high. Instead look into scholarships and grants to help you pay for college.”

Student loan consolidation

The second measure would encourage graduates with two or more different kinds of federal loans to consolidate their loans by lowering the interest down to 0.5 percent. This will in turn lower their monthly payments and save the hundreds of dollars in interest, according to the White House Report.

The Obama administration said that 1.6 million Americans  whose income is sufficiently low will benefit from the lower monthly payments, and upwards of 6 million can take advantage of the loan consolidations.

Armenka Khashman, assistant director of CSUN financial aid and scholarship department, said that students can contact their loan service provider to sign up for the debt relief plan.

“I recommend that students keep track of their loans by going to the National Student Loan Data System at the federal student aid site so they can know how much they owe,” she said. “Also to minimize the cost while they’re in school they should attend school full-time if possible and research scholarships before deciding what to borrow.”

Grad thoughts on debt loan plan

Hubert De Leon Tzic, 23, a CSUN grad with a B.A. in sociology, said he was fortunate enough to have received enough financial aid to cover the last five years of his tuition. He also worked during his academic semester to get out of school debt free.

“Given the circumstances President Obama should have done more to provide relief for recent graduate students,” he said. “Personally, I do not think this debt relief plan does much to provide the help necessary for graduate students to feel at ease with their debt. Unfortunately I have an overwhelming amount of friends who are in debt due to school loans and who have yet to find a stable job.”


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  • christina jenkins

    Id like to know too. Pls if anyone know anythingbols reply back

  • julie007

    I say stay with unsubsidized and subsidized loans and grants or scholarships if you can. Stay away from private lenders!! I am almost $50,000 in debt as an undergrad student. I will have my bachelor’s in about 5 months. I want to go on for my Master’s, but is it worth it? I am going into the counseling/psychology field. Thanks. 

  • gbgilmer

    I have student loans which are in default, they are about 98,000, I am on disability.  I called the Student Loan foundation about Obama’s Income Based Repayment plan, according to them because I,m in default I do not qualify.  In order to qualify, you have to pay on your loans for 20 years without ever going into default, and if you pay for 20 years then if you owe any money they will forgive the rest of it.  If you pay on it for 20 years your loans are about paid for,  Obama’s plan is a farce,  he wants to look good cause this election year, he not helping anyone!

  • gbgilmer

    I am on disability and have a federal student loan that in default currently it is around 98,000, I called the Student loan foundation and they told me  that  I didn,t qualify for the IBR , in order to qualify for Obama’s plan you can never be in dafault and pay 20 years  towards your loans in order to get loan forgiveness.  If that is true, then your loans are about payed for or close to it and Obama plan  is a farce, just  something he came with to look good and fool people,  his plan is a joke!

  • Tam196816

    i am on thi program,contact thedep of ed or your collction agency it is real

  • http://ameriloansearch.com/ no credit check loans

    This plan doesn’t get to the heart of the issue of increasing student loan debt: increasing tuition and education costs! Why not have academic institutio­ns bear some responsibi­lity for the student loan debt their students incur by guaranteei­ng a portion of that debt? This would provide a huge disinsenti­ve against tuition hikes, especially if their alumni have no way of paying off those loans later on. While my wife and I are still working through our own student loans, at least we can pay them. I’m far more concerned that–in spite of our savings–w­e have no hope in paying for kids’ educations.

  • http://profile.yahoo.com/VFEUM5J7QSH5SBOSL44BDONIPI Sgt Duncan PI

    I dont know if this program will be as popular as Obamas loan modification program but I do hope that it helps students. There are a lot of students that are really struggling with the debt burden they have taken on in university!

    Compare Obamas loan modification plan - http://obama-loanmodification.com/
    with the federal student loan forgiveness plan - http://federalstudentloanforgiveness.info/

    and you will see that many of the same mistakes made the first time around are being made again! pitty!

  • help me

    I called Sallie Mae, and they said that I would be notified by the government program and that they (Sallie Mae) did not prequalify for this. I would like to know where I can proactively apply for this myself rather than wait to get some sort of letter in the mail. If anyone else has info please let us know. Thanks in advance!

  • Carolyn

    Does anyone know where I can get more information on President Obama Debt Relief Plan? Is ther a form? Does the lenders have this information, but are not so eager to share, or are making it difficult for borrowers to obtain?

  • Carolyn

    My student loan was orginally $70,000, now it is over $500,000 and continues to grow because I cannot afford the payments. My loan will probably go into default which I will like to avoid, but because of my financial situation I just cannot afford the payments. I can afford a lower payment, but the lender wants all. What about President Obama’s debt relief plan?  My husband is disabled and has been for many years….25+. I am his caretaker. I requested a reduced payment, but the lender is not interested.

    • http://profile.yahoo.com/MEK7EM5VJUGJOCS2EFOLZKH6FU Carolina

      Can I email you I’m writing a paper on this matter and could use student voice on this matter.
      Or you can email me Carolina.leon.827@my.csun.edu

  • Ochomeans8

    Yeah…How can I apply for this?  I have a graduate degree, and it doesn’t appear that the application is available anywhere.  I suspect that this has not gone into effect yet, as the article says.

  • PRstudent

    Where can one find more information about applying for this program now?
    I’m just finding past reports and nothing about it being available right now

    • Huberj

      I called the fed loan program - they know NOTHING about this as of today 2/12/2112.
      This plan is so far a farce.
      not one supervisor of the 2 I requested could even comment on what the plan was or when this plan would ever be enacted.
      This is so far an empty promise.

  • Anonymous

    Though loans may be more difficult to get than a few years ago, 123 Refinance is still helping plenty of people.  It’s back to common sense underwriting, and guidelines to make the refinance possible for you.

  • JD Painterguy

    My Student Loan Debt has nearly quadrupled from the 79K it was in 1997, to the 315K it is now. It has a fixed 8.25 percent interest rate, and under the current arrangement I have, it will be discharged in 23 years, but it will have grown to over 1.5 million dollars as the interest gets compounded. The taxpayer will pay all of that interest if I cannot.