In 2015, Corinthian Colleges, one of the largest for-profit colleges in the U.S, went bankrupt after federal investigations found the company to be using deceptive practices to commit fraud towards its students. The federal government is still picking up the pieces from its collapse. But have no fear because in 2010 the Obama administration signed the new Obama student loan forgiveness program that caps student loan payments at 10% of your income. This income-based payment setup is otherwise known as the "Pay as you Earn" program. Check your eligibility. This helps borrowers potentially save thousands of dollars on student loan payments and even "forgive" the loan as a whole!
What Is the Obama Student Loan Forgiveness Program?
The Student Loan Forgiveness Program is a federal program that assists those working in public service jobs, such as nonprofits, manage their debt loan through forgiveness after 120 payments (ten years).This program, signed in 2010 by the Obama administration, gives borrowers (as well as lenders) options to help student consolidate and refinance their student loans. This is a great alternative to the standard 20-25 year forgiveness plans that come with standard federal loan repayments. Learn more about student loan forgiveness.
Will Trump Get Rid of the Student Loan Forgiveness Program?
There is no guarantee that president Donald Trump will keep the Obama student loan forgiveness program. Trump recently signed off on executives orders that negated some of the previous work by the Obama administration. He has yet to comment on the status of federal student loans, but we are sure it is on his radar. If you ever considered applying for student loan forgiveness, right now is the best time to apply. You have the opportunity to be grandfathered into the current program and pay $0.00/mo on your current student loans. Contact one of our advisors to discuss your student loans.
For-Profit Universities Accused of Fraud
The U.S. Department of Education announced that students who were defrauded at 91 former Corinthian campuses across the country "have a clear path to loan forgiveness under evidence uncovered by the Department while working with multiple state attorneys general," according to a statement from the department. Students who took classes at Corinthian schools under its Everest and WyoTech brands in more than 20 states are eligible to apply for debt relief through an online form. The Education Department is making efforts to reach out to students to notify them of the relief measure through postal mail, email, partner organizations and by other means.
The announcement marks the largest group of borrowers to be offered debt relief since the Education Department began to sort through evidence last year to determine which Corinthian students deserve to have their loans forgiven. Last summer, a similar online form was announced and sent out to students who attended 12 Corinthian schools under the Heald College brand.
In total, more than 8,800 former Corinthian students have been approved for loan discharges so far, totaling more than $130 million, according to the Education Department.
But some advocates for Corinthian student debt relief think this is all too little, too late. They say that even including the new relief measures, there are thousands of defrauded students who are still not eligible for the relief from loans.
Laura Hanna, co-founder of the Debt Collective, a group that helped organize a debt strike among former Corinthian students last year, said the latest debt discharge still leaves much to be desired.
"The majority of debtors we've been organizing with since November 2014 will not receive relief from this announcement," she said in an email. "And of those who qualify, plenty of people will never receive relief because they won't know to apply for it. This is a serious issue for all those who are low income, don't have access to computers or may not catch a news item about said possible relief."
Hanna and other advocates for more substantive debt relief think that given the widespread evidence of exploitative practices at Corinthian schools — and the kind of disrepute associated with a degree from one of them — an automatic class-wide discharge for all borrowers is both most appropriate and most efficient.
For the moment, it appears the debt relief process will remain slow and prone to allowing some defrauded students to slip through the cracks entirely. Don't be one of those students and consider applying for the Obama student loan forgiveness program while you still have the chance. Fill out the form below to get started.