Obama Student Loan Forgiveness Program

Sarah Vorn and Sarah Vorn

The college experience can leave students rich in knowledge but poor in pockets.

On Nov. 16, California State University trustees voted to raise tuition by 9 percent, increasing annual undergraduate tuition by about $500, bringing the 2012 fall tuition to $5,970. The decision sparked angry protests from students and employees of several public college campuses, including California State University, Sacramento, UC Berkeley and UC Davis.

As the cost of tuition continues to rise, so parallels student loan debts. In 2010, two-thirds of seniors graduated with student loan debts, and owed an average of $25, 250 according to a report by The Institute for College Access and Success. In California, student debt averaged $18,113. These figures are staggering when coupled with the 9.1 percent unemployment rate for young college graduates.

On Oct. 25, President Obama announced additional steps that would make going to college more affordable as well as reduce the burden of federal student loan repayment. The Obama Loan Forgiveness Program is set to go into effect next year. It would affect more than 1.6 million borrowers, and could help to eliminate up to over $100,000 of student loans for eligible graduates.

One component of the recently improved Loan Forgiveness Program would be the reduction of graduates’ monthly installment from 15 percent of discretionary income to 10 percent. Additionally, the loan period would be reduced from 25 years to 20 years, with the remainder of the debt to be forgiven by the federal government if payments were made on time each month and without defaulting.

Graduates choosing to opt for public service jobs such as doctors, lawyers and teachers would further benefit with as much as 10 years reduced before loan forgiveness resulting in only 10 years of student loan debt.

One such example is Lucas Wilson, a first year E.M.T student at American River College. “It would be of a big impact,” said Wilson, who doesn’t receive any financial aid. “(The E.M.T course) is the most expensive class I’ve taken, and any financial help is a big help.”

There’s more good news for Wilson, who is planning on joining the military: Students choosing to serve in the military or volunteer work could have their debts eliminated completely.

Amidst the rising cost of tuition, it’s an encouraging sign that President Obama is focused not only on encouraging higher education, but helping graduates manage the cost of it.

To determine whether or not income-based repayment is the right option, visit http://studentaid.ed.gov/ibr.