Everything You Need to Know About the “Obama Student Loan Forgiveness” Myth

obama student loan forgiveness

How awesome would it have been if President Obama swooped in and forgave your student loans? It would probably be the best kind of executive pardon in U.S. history.

One of the first things many borrowers may do when it’s time to pay back those loans is scour Google. They look for some kind of student debt relief, aid or assistance program to help assuage your financial burden.

But if you come across an offer for “Obama Student Loan Forgiveness,” run the other way. These sites are not government sanctioned — but rather scams of presidential proportions.

Learning what these programs actually offer can help you distinguish what’s a ruse and what’s reality. Know your options, and you might have a chance at finding real student loan forgiveness.

How the Obama Student Loan Forgiveness scam started

Like any lie, there’s a bit of truth in the Obama student loan forgiveness scam. The wording of fake Obama student loan forgiveness programs often closely resembles a legitimate student loan directive that Obama signed into action two years ago.

In 2014, the president expanded the Pay As You Earn plan. Also called PAYE, it lets borrowers cap their student loan payments at 10-15 percent of their discretionary income, with loan forgiveness after 20-25 years. (Keep reading to see more on this type of income-based repayment option.)

There were other elements of Obama’s borrower-centric plan, including:

  • Improving processes to prevent borrowers from defaulting
  • Streamlining active-duty military members’ ability to receive benefits under the Servicemembers Civil Relief Act
  • Making consumers aware of their higher education rights through partnerships with the IRS and various tax companies

Thus, scammers naturally latch on to this type of official news when trying to hook desperate borrowers in debt; if it sounds Congressional and governmental, it must be real, right?

Obama student loan forgiveness is a myth

Generally, programs called “Obama Student Loan Forgiveness” are simply scams. These Obama student loan forgiveness scams just charge you a bundle to fill out some government paperwork. But you can easily find, fill out and file these student loan forms yourself — for free.

Unfortunately, some student loan borrowers have already fallen for such a trick.

Two years ago, the Illinois State attorney general filed a suit against a company accused of predatory student loan practices. According to FOX Business, the Texas-based organization charged consumers hundreds and thousands of dollars for phony debt relief.

One such “Obama Forgiveness Program,” alleged the claim, led victims to pay as much as $1,200 for the fake government aid.

Where’s the real student loan forgiveness?

Though neither Obama or President Trump will be there to sign off on student debt forgiveness, there are still plenty of realistic alternatives to help you pay off your student loans.

Now that you’re aware of the scams, take a look at some of these legitimate student loan forgiveness options.

1. Income-Based Repayment (IBR)

IBR caps your student loans payments at 15 percent of your discretionary income, with your loans completely forgiven if you’ve reached up to 25 years of consistent payments.

Loans that are eligible for IBR include Direct, Direct PLUS and Direct Consolidated Loans, Federal Stafford Loans, FFEL Plus and Consolidated Loans.

2. (PAYE) Pay As You Earn program

PAYE closely mimics IBR. Here, your payments are also capped at 10 percent of your discretionary income, with loans forgiven after 20 years.

To qualify, you’ll need to demonstrate financial hardship. For instance, your payments, as calculated under your income, can’t be more than a payment under the 10-year Standard Repayment Plan.

Take note that with PAYE, the forgiven loan balance is taxable.

3. Teacher Loan Forgiveness

Borrowers who teach for five consecutive years in a low-income elementary or secondary school or educational agency may qualify for Teacher Loan Forgiveness – up to as much as $17,500 if you’re “highly qualified” and teach math, science, or special education.

According to the U.S. Department of Education, Teacher Loan Forgiveness does not include PLUS loans.

4. Public Service Loan Forgiveness (PSLF)

If you work in public service, nonprofit or similar agency, you may be eligible for Public Service Loan Forgiveness. Here, your loans are forgiven after 10 years of consistent repayment and employment with a qualifying organization.

5. Profession-specific Student Loan Forgiveness

In addition to PSLF, there are other student loan forgiveness and aid programs offered to borrowers of certain professions. We’ve created guides to these programs for several careers:

6. Total and Permanent Disability Discharge (TPD)

This type of student loan forgiveness absolves you from repaying a Direct Loan, FFEL Loan, or Federal Perkins Loan. According to the Department of Ed, you’ll need to provide proof of a total and permanent disability to become eligible.

These are just a few of the official student loan forgiveness programs of which you can take advantage. Before proceeding, check with your lender or loan servicer to see which avenue might be best for you and your finances. And lastly, do

And lastly, do your homework and research all student loan options to ensure they are legitimate — and you don’t fall victim to a scam.

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