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.
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.
Interested in refinancing student loans?Here are the top 6 lenders of 2018!
|Lender||Variable APR||Eligible Degrees|
|Check out the testimonials and our in-depth reviews!
1 Important Disclosures for Earnest.
To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest fixed rate loan rates range from 3.89% APR (with Auto Pay) to 7.89% APR (with Auto Pay). Variable rate loan rates range from 2.47% APR (with Auto Pay) to 6.97% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of Month/Day/Year, and are subject to change based on market conditions and borrower eligibility.
Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 08/21/18. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at email@example.com, or call 888-601-2801 for more information on ourstudent loan refinance product.
© 2018 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.
2 Important Disclosures for Laurel Road.
Laurel Road Disclosures
APR stands for “Annual Percentage Rate.” Rates listed include a 0.25% EFT discount, for automatic payments made from a checking or savings account. Interest rates as of 11/8/2018. Rates subject to change.
Variable rate options consist of a range from 3.27% per year to 6.09% per year for a 5-year term, 4.64% per year to 6.14% per year for a 7-year term, 4.69% per year to 6.19% per year for a 10-year term, 4.94% per year to 6.44% per year for a 15-year term, or 5.19% per year to 6.69% per year for a 20-year term, with no origination fees. APR is subject to increase after consummation. The variable interest rate will change on the first day of every month (“Change Date”) if the Current Index changes. The variable interest rates are based on a Current Index, which is the 1-month London Interbank Offered Rate (LIBOR) (currency in US dollars), as published on The Wall Street Journal’s website. The variable interest rates and Annual Percentage Rate (APR) will increase or decrease when the 1-month LIBOR index changes. The variable interest rates are calculated by adding a margin ranging from 0.98% to 3.80% for the 5-year term loan, 2.35% to 3.85% for the 7-year term loan, 2.40% to 3.90% for the 10-year term loan, 2.65% to 4.15% for the 15-year term loan, and 2.90% to 4.40% for the 20-year term loan, respectively, to the 1-month LIBOR index published on the 25th day of each month immediately preceding each “Change Date,” as defined above, rounded to two decimal places, with no origination fees. If the 25th day of the month is not a business day or is a US federal holiday, the reference date will be the most recent date preceding the 25th day of the month that is a business day. The monthly payment for a sample $10,000 loan at a range of 3.27% per year to 6.09% per year for a 5-year term would be from $180.89 to $193.75. The monthly payment for a sample $10,000 loan at a range of 4.64% per year to 6.14% per year for a 7-year term would be from $139.65 to $146.76. The monthly payment for a sample $10,000 loan at a range of 4.69% per year to 6.19% per year for a 10-year term would be from $104.56 to $111.98. The monthly payment for a sample $10,000 loan at a range of 4.94% per year to 6.44% per year for a 15-year term would be from $78.77 to $86.78. The monthly payment for a sample $10,000 loan at a range of 5.19% per year to 6.69% per year for a 20-year term would be from $67.05 to $75.68.
However, if the borrower chooses to make monthly payments automatically by electronic funds transfer (EFT) from a bank account, the variable rate will decrease by 0.25%, and will increase back up to the regular variable interest rate described in the preceding paragraph if the borrower stops making (or we stop accepting) monthly payments automatically by EFT from the designated borrower’s bank account.
3 Important Disclosures for SoFi.
4 Important Disclosures for LendKey.
Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
5 Important Disclosures for CommonBond.
Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown.
All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 2.28% effective October 10, 2018.
6 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|2.47% – 6.99%3||Undergrad & Graduate|
|2.57% – 6.97%1||Undergrad & Graduate|
|2.51% – 8.09%4||Undergrad & Graduate|
|3.02% – 6.44%2||Undergrad & Graduate|
|2.50% – 7.24%5||Undergrad & Graduate|
|2.79% – 8.39%6||Undergrad & Graduate|