Student Loan Forgiveness – Obama Announced

On Wednesday, President Barack Obama announced the student loan forgiveness plan that will allow college graduates to cap their payments to 10% of discretionary income, with remaining debt forgiven after 20 years. In other words, if students pay their federal government student loans for 20 years, the rest would be forgiven. Currently, that happens after 25 years.

This is a welcome news for students who can now save hundreds per month.

Read part of the press release:

The Administration is moving forward with a new “Pay As You Earn” proposal that will reduce monthly payments for more than one and a half million current college students and borrowers. Starting in 2014, borrowers will be able to reduce their monthly student loan payments to 10 percent of their discretionary income. But President Obama realizes that many students need relief sooner than that. The new “Pay As You Earn” proposal will allow about 1.6 million students the ability to cap their loan payments at 10 percent starting next year, and the plan will forgive the balance of their debt after 20 years of payments. Additionally, starting this January an estimated 6 million students and recent college graduates will be able to consolidate their loans and reduce their interest rates.

Video: Obama unveiling the Student Loan Forgiveness Plan