The name "Obama Student Loan Forgiveness" has become the nickname for a program actually called the William D. Ford Direct Loan program. Many people only know about the program, and have heard of it through others as the Obama Student Loan Forgiveness program. The name came about when President Obama reformed part of the Direct Loan program in 2009 in his Health Care and Education Reconciliation Act of 2010. It's important to keep in mind all the programs are offered for federal student loans. Private loan borrowers are not able to benefit from any of the below information
A Student Loan consolidation occurs when you combine multiple loans into a single loan. If you have more than one federal student loan, you may qualify to consolidate them into one Direct Consolidation Loan. If you currently make separate student loan payments, you will instead have just one monthly payment to make, therefore making for a simpler repayment process. You may also qualify for a lower payment depending on your current situation.
In many cases, you are eligible for a consolidation after you graduate, leave school, or drop below half-time enrollment.
Most federal student loans are eligible for a consolidation, including:
(*) Default loans must meet certain requirements before a consolidation can be done. PLUS Loans (dependent students) - May not include the PLUS loan the parent took out for the dependent student's education.
A Student Loan Deferment is when the repayment of your loan is temporarily delayed. At this time, you do not need to make payments. Additionally, the federal government may pay the interest on your loan during deferment periods. The government may pay your interest on any of the following loans:
You are responsible for paying the interest that accrues (accumulates) during the deferment period, but your payment is not due during the deferment period. If you don't pay the interest on your loan during deferment, it may be capitalized (added to your principal balance), and the amount you pay in the future will be higher. Contact Us today to find out if you are eligible for a Deferment!
A Student Loan Forbearance will temporarily reduce or suspend your loan payments. If you are in financial hardship, cannot make your scheduled loan payments and do not qualify for a deferment, you may be eligible for a forbearance. During the forbearance period, you may reduce or stop your monthly payments for up to 12 months. Interest will continue to accrue on your subsidized and unsubsidized loans (including all PLUS loans). There are two types of forbearances:
For discretionary forbearances, your lender decides whether to grant forbearance or not. You can request a discretionary forbearance for the following reasons:
For mandatory forbearances, if you meet the eligibility criteria for the forbearance, your lender is required to grant the forbearance. You can request a mandatory forbearance for the following reasons:
A Student Loan Forgiveness is the cancellation of some of or all of your remaining federal student loan balances. You are no longer responsible for repayment of the loan in the event your loan is forgiven. A student loan can only be forgiven, canceled or discharged under certain circumstances. The following is the chart of forgiveness, cancelation and discharges. Based on the type of existing loan you have, this chart shows whether you may qualify for one of these:
If your student loan is in default, you may get out of default status with a Rehabilitation loan. The DOE must approve a reasonable and affordable payment plan in order for you to rehabilitate your loan(s). Once you have voluntarily made the agreed-upon payments on time and the loan has been purchased by a lender, your loan is then rehabilitated. You may then regain eligibility for benefits that were available on your loan before you defaulted, including a consolidation, deferment, forbearance, a choice of repayment plans, forgiveness, and eligibility for additional federal student aid.
After rehabilitation, your monthly payment may be more than the amount you paid while you were rehabilitating your loan. Collection costs may be added to your principal balance, increasing the total amount you owe. Delinquencies (late payments) reported before the loan defaulted will not be removed from your credit report.
- Sources: Federal Reserve, Department of Labor, Sarah Millar of ConvergEx, Center for College Affordability and Productivity, College Board, Project on Student Debt
Millions of student loan borrowers are senselessly defaulting on their debt while failing to take advantage of programs meant to protect them financially. With all the repayment plans and programs available to borrowers, it should be near impossible to default on a student loan. And yet it happens because borrowers fail to identify, recognize or navigate the information and sources available to help. At SDS, we have friendly and knowledgeable Student Loan Advisors who can provide the guidance you seek to avoid becoming a default statistic; the consultation is free. Call 305-514-0032
Borrowers who fail to make a payment on time are considered delinquent on their Direct Consolidation Loans. Borrowers who do not make payments for 270 days are in default. Defaulting has severe and long-lasting consequences, as follows:
It is important that borrowers with Direct Consolidation Loans stay in touch with the Direct Loan Servicing Center. Default can occur when borrowers fail to keep the Direct Loan Education Center up to date on address and name changes, causing billing statements to go astray. In addition, the Direct Loan Education Center can offer alternatives when borrowers have trouble making monthly payments. Borrowers may apply for a deferment or forbearance, or change repayment plans. Speak to a Student Loan Advisor at SDS Student Debt Solutions Center for a not cost or obligation analysis of your student loan needs.
There are many benefits to rehabilitating a defaulted loan before consolidation. If you consolidate a defaulted loan without rehabilitating it, your credit record continues to show a default status on the loan. This is true even after the consolidation loan pays off the defaulted loan in full.
Consolidating a defaulted loan will result in your credit report bearing the notation that the loan was in default but then "paid in full." This notation will remain on the credit report for up to seven years. While a "paid in full" notation is preferable to an unpaid default, , there is still the possibility that lenders will deny you future credit, such as mortgages, auto loans, or credit cards because of this notation. However, if you rehabilitate a defaulted loan before consolidating it, the loan holder will update your credit record to no longer reflect the default status of the rehabilitated loan(s). Rehabilitating a defaulted Direct Loan or FFEL loan requires that you make at least nine (9) full payments of an agreed amount within twenty (20) days of their monthly due dates over a ten (10) month period. Rehabilitating a defaulted Perkins loan requires twelve (12) on-time monthly payments. Contact your loan holder to obtain additional rehabilitation terms and conditions for your loan type.
Keep in mind that if you default on your loan, you are liable for any collection costs incurred to collect the loan. If you pay off the defaulted loan by taking out a Consolidation Loan, the amount you borrow must be enough to pay off your defaulted loan, including principal, interest, and collection costs. This means that the amount of the new loan may need to be up to 18.5% larger than the principal and interest outstanding on your defaulted loan. Both rehabilitation and consolidation will reinstate your eligibility for additional Federal student aid under Title IV of the Higher Education Act (Pell Grants, FFEL and Direct Loans etc.)
If you are currently facing the stress of defaulting on your student loan, help is available. Free advice from a Student Loan Advisor is available from the SDS Student Debt Solutions Center. Call today: 305-514-0032
There are many companies that deal with Student Loan remediation. Our experts are completely familiar with all current government loan consolidation programs that are constantly changing as the months and years go by.
Did you know that when it comes to your student loan debt that the U.S. government through the Department of Education has created many programs that millions of borrowers fail to take advantage of. Literally, millions of unclaimed benefits go unused because the public is either unaware or finding it difficult to navigate the "red tape" to gain access to programs that are specifically set aside for student loan borrowers. Millions of borrowers needlessly struggle with payments or default on their loans when they actually qualify for money-saving programs that could reduce their payments to nothing! That's right: NOTHING!
The SDS Student Debt Solutions Center has friendly and knowledgeable Student Loan Education Advisors who can help you apply and qualify for the student loan programs that you deserve.
Through the WILLIAM D. FORD ACT the U.S. Department of Education offers various Student Loan Consolidation Programs in which will pay your existing lenders, which "consolidates" all of your federal loans into one new loan. There are four different programs they offer:
These programs were designed to assist student loan borrowers who are struggling to make their monthly payments. The U.S. Department of Education considers income and family size to determine which program the borrower is most suited for. For example, if you have a large family and/or a low income, it may be most advantageous to enroll in the Income Based Repayment program where your new payment will be set based on your ability to pay. The monthly payment is calculated based on your disposable income (income after expenses), even if that means a $0.00 monthly payment!
" Carolina. At SDS Student Debt Solution helped me out by saving me a projected $100,000+!!! Huge weight off my shoulders. If you are considering consolidation… call SDS Student Debt Solution!!! "
Monika L. (Aprol 29, 2015)
" My loan consultant: Luis C. helped me so much. He was very nice and understanding, my loans are now going to be taken care of so I can go back to school and help provide a better life for myself, my husband and my son! I can't thank them enough!!! "
Jorge S. (March 18, 2015)
" I worked with my servicer for nearly a year attempting to lower my payment. Within 30 minutes of speaking with the SDS Student Debt Solutions I was able to get qualified for a program that my servicer couldn't offer. I am on the path to total loan forgiveness. It was the smartest move I have made since graduating. "
Laura D. (March, 2015)
" My counselor helped me through the entire process of consolidating my loans! She was wonderful, personable, friendly, down to earth (I feel like she was a friend and I feel like I knew her all my life) very patient and professional! Even through some snags, she was wonderful and understanding! The process was easy and she made it fun as well! I appreciate all the help! I will recommend SDS Student Debt Solutions to others that may need assistance! "
Jessica R (May 2015)
We guarantee you will qualify for the program you choose or you will receive a 100% refund. We offer a full money back guarantee if your application is denied by the DOE due to our error. Accurate preparation of your application is highly dependent on the accuracy of the information you provide to your consultant. It is important to be completely upfront and honest about your current situation. There are millions who are in the same position as you. Our consultants are here to help you and make this a simple and painless process for you.
We guarantee you will qualify for the program you choose or you will receive a 100% refund. We offer a full money back guarantee if your application is denied by the DOE due to our error
People who are considering SDS Student Debt Solutions have many options and frequently need help to determine their best course(s) of action. They also need resources and services they can count on. People interested in seeking assistance with their student loans need to research the myriad of government-approved programs and pay plans that are designed to provide financial assistance to those struggling with their current student loan debts and payments - but it can be a daunting task.
If you have trouble meeting your monthly payments, have exhausted your deferment and forbearance options, and/or want to avoid default, a Direct Consolidation Loan may help you.
If you send payments to more than one lender every month, and want the convenience of a single monthly payment, consolidation may be right for you. With a Direct Consolidation Loan, you will have a single government lender and a single monthly payment.
If you have variable interest rates on your Federal education loans, you may want to consolidate. The interest rate for a Direct Consolidation Loan is fixed for the life of the Direct Consolidation Loan. The rate is based on the weighted average interest rate of the loans being consolidated, rounded to the next nearest higher one-eighth of one percent and cannot exceed 8.25 percent.
With only one lender and one monthly payment due for student loans, it is easier than ever for borrowers to manage their debt. Borrowers have only one government lender, for all loans included in a Direct Consolidation Loan.
Borrowers can choose from multiple repayment plans with various term selections to repay their consolidation loan(s), including an Income Contingent Repayment and an Income-Based Repayment Plan. We can go over these with you to ensure they are simple and understandable. These plans are designed to be flexible to meet the different and changing needs of borrowers. With a consolidation loan, borrowers can switch repayment plans at any time.
There is no minimum amount required to qualify for a Direct Consolidation Loan! In addition, consolidation has affordable cost!
Borrowers with consolidation loans may qualify for renewed deferment benefits. If borrowers have exhausted the deferment options on their current Federal education loans, a consolidation loan may renew those deferment options
A consolidation loan may ease the strain on a borrower's budget by lowering the borrower's overall monthly payment. The minimum monthly payment on a consolidation loan may be lower than the combined payments charged on a borrower's Federal education loans.
There are two (2) possible portions to a consolidation loan: Subsidized and Unsubsidized. Borrowers retain their subsidy benefits on loans that are consolidated into the subsidized portion of a consolidation loan.
Generally, you are eligible to consolidate after you graduate, leave school or drop below half-time enrollment.
You must have at least one Direct Loan or FFEL Program loan that is in a grace period or in repayment. If you want to consolidate a defaulted loan, the Student Loan Education Center can help you make satisfactory repayment arrangements on the loan with your current loan servicer before you consolidate, or you must agree to repay your new Direct Consolidation Loan under the Income-Contingent Repayment Plan or the Income-Based Repayment Plan. The Student Loan Education Center can qualify you for the correct program and assure your approval through the Department of Education.
A Direct Consolidation Loan has a fixed interest rate for the life of the loan. The fixed rate is based on the weighted average of the interest rates on the loans being consolidated, rounded up to the nearest one-eighth of 1%. However, the rate will not exceed 8.25%.
Call us now for your FREE consultation! One of our Student Loan Advisors will go over your existing loans and based on your situation, qualify you for the best consolidation program that fits your needs. Call a friendly and professional SDS Student Loan Advisor at 407…… or complete the Contact Us form on this website and a Student Loan Advisor will follow up with you shortly.
Repayment of a Direct Consolidation Loan can begin 60 days after the loan is disbursed, or sooner. We will let you know when the first payment is due. The repayment term ranges from 10 to 30 years, depending on the amount of your consolidation loan, your other education loan debt, and the repayment plan you select.
There are several repayment plans that are designed to meet the different needs of individual borrowers. You will receive more detailed information on your repayment options from your loan servicer when you consolidate your loan.
In 2007, Congress created the Public Service Loan Forgiveness Program to encourage individuals to enter and continue to work full-time in public service jobs. Under this program, borrowers may qualify for forgiveness of the remaining balance due on their eligible federal student loans after they have made 120 payments on those loans under certain repayment plans while employed full time by certain public service employers. Call today to speak to a Student Loan Advisor to see if you possibly qualify.
How It Works: You will have a fixed monthly payment of at least $50 for up to 10 years. You'll be automatically enrolled in this plan if you don't choose another one.
The Good: You'll pay off your loan faster and pay less interest compared to other plans. Your loan is paid off within 10 years.
The Bad: Your monthly payments will be higher than those made through other plans.
Who it's For: Anyone who can afford the higher monthly payments.
How It Works: Your payments are lower at first, then increase usually every two years.
The Good: Your loan is still paid off within 10 years.
The Bad: You'll pay more interest over the lifetime of your loan Compared to the Standard Plan.
Who it's For: Borrowers who are confident their income will increase And for those who may not be able to handle the higher monthly Payments under the Standard Repayment Plan.
How It Works: You have the option of setting fixed monthly payments, like with the Standard Plan, or increasing them over time, as with the Graduated Plan. To be eligible, you must have more than $30,000 in outstanding Direct Loans or Federal Family Education Loans borrowed and must be a "new borrower" after October 7, 1998.
The Good: Smaller monthly payments compared to the Standard Plan and more time to pay off your loan.
The Bad: You'll have payments for a longer period of time and pay more interest. The repayment window for this plan is up to 25 years.
Who it's For: Borrowers who need to lower their monthly payments in exchange for paying more over the lifetime of the loan.
How It Works: Your monthly payments will be capped at 15% of your discretionary income and readjusted each year based on your income and family size. To qualify, you must have a partial financial hardship.
The Good: Your payment will be less than the Standard Plan. If you have not paid your loan in full after making the equivalent of 25 years of qualifying payments, you will be eligible to have any remaining debt forgiven. If you work in public service, you could have some debts forgiven after 10 years. The government will also pay unpaid accrued interest on certain loans for up to three consecutive years if your payments don't cover it.
The Bad: You have to provide annual documentation of your income, so that your repayments can be adjusted. If you are late supplying that information, you will be automatically enrolled in the Standard Repayment Plan, which can mean a big jump in payments. You may also pay more interest over the course of this loan than you would with other plans, and you may also have to pay income taxes on the amount of debt that is forgiven after 25 years.
Who it's For: Eligible borrowers with outsized loans who are looking to make their repayments more affordable.
How It Works: Monthly payments are capped at 10% of your discretionary income, and readjusted each year based on your income and family size. As with the IBR plan, you must qualify for a partial financial hardship to be eligible.
The Good: Your payment will be less than the Standard Plan. If you have not paid your loan in full after making the equivalent of 20 years of qualifying payments, you will be eligible to have any remaining debt forgiven. If you work in public service, you could have your debt forgiven after 10 years. Under certain conditions, the government will pay your unpaid accrued interest for up to three consecutive years from the date you started repaying your loans under PAYE. Interest is not added to your principal unless you no longer have a partial financial hardship, in which case the amount of interest that may be added is limited to 10% of your original principle when you began using PAYE. In general, how often your interest is capitalized is determined by the terms of your loan and the more often it's capitalized, the more expensive it may be.
The Bad: You'll pay more over the lifetime of your loan than you would with a 10-year plan. PAYE is only available to borrowers who have received a loan disbursement on or after October 1, 2011 and who new borrowers were as of October 1, 2007. You must also provide documentation of your income each year, and you may be on the hook for income taxes on the amount of debt that is forgiven.
Who it's For: Recent graduates who want to keep their monthly payments low or affordable.
How It Works: Payments are based on your adjusted gross income, family size, and the amount of your loans. Your payments change as your income changes: You pay either an amount based on a 12-year repayment plan that's multiplied by an income percentage factor or 20% of your monthly discretionary income, whichever is less.
The Good: Your payment will be less than the Standard Plan. If you have not paid your loan in full after making the equivalent of 20 years of qualifying payments, you will be eligible to have any remaining debt forgiven.
The Bad: You'll pay more over the lifetime of your loan than you would with a 10-year plan, and you may have to pay income taxes on any forgiven debt. If your monthly payment under the plan doesn't cover accrued interest, the interest on your loan is capitalized once per year until the total balance is 10% higher than your original balance when you began paying off the loan. Any interest accrued during deferment or forbearance is not included in that rule. You must also provide documentation of your income each year.
Who It's For: Borrowers who don't qualify for IBR or PAYE plans because they don't demonstrate a partial financial hardship, but who want to keep monthly payments low.
How It Works: Your monthly payments are based on your annual income. The income-sensitive repayment plan is an alternative to the income-contingent plan, for borrowers with loans that do not qualify for the latter.
The Good: You determine the percentage of your monthly payment between 4% and 25% of your monthly gross income, although your payment must be greater than or equal to the interest that accrues.
The Bad: It's only available for up to five years. After that time, you must switch to another repayment plan, under which you may have up to 10 more years to repay your debt. Income-sensitive repayment extends your repayment period. As a result, the total amount you pay in interest may be greater than what you would pay under Standard Plan.
Who it's For: Low-income borrowers who want flexibility in setting their own repayment terms.
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