This program was actually part of his election campaign back in the year 2007.
The idea of this plan is to eliminate a certain amount of debt that is affecting a large amount of Americans. His plan has no impact on any private loans taken out by students to pay for college education.
This is a huge benefit if something happens to your physically, mentally, financially, or basically anything that interferes with your ability to currently pay any amount on your student federal loans.
The only other benefit under the plan is that you can now get economic hardship forgiveness for ten years.Previously deferments and things of this nature were only up to a year.After that the plan takes your current income and makes your payments only 10% of your income. The rate stays at 10% of your income and is to never exceed that amount.There is also a clause in his plan that states if you consolidate your federal student loans 0.25% of the monthly payment will be reduced and even an additional .25% if you agree for the payment to automatically be taken out of a certain funding account whether it be a checking and or savings account.
Although Obama’s loan forgiveness program has been introduced numerous times over the past four years it was not till spring 2012 that it actually became effective. Currently this plan only applies to those who borrow before July 2012.There is currently no information on current borrowers who take out federal student loans after this point.