Obama Student Loan
Obama student loan program is a reform included in the loan programs offered to the students by the government. This took place in the month of July in 2010 when the President of the United States Barak Obama announced that he will introduce an affordable plan for students buried under the loan programs since they have graduated which was almost a decade ago, in most cases. According to the Obama student loan reform, students under the federal financial aid program do not receive their payments from banks but are to receive their monthly payments via their respective institutes. The reform ended the interaction of the Department of Education with private banks and incorporated schools directly into the system to make it simpler and convenient. All loan transactions since 2010, according to the Obama student loan reform, take place with the Department of Education acting as the lender and there is no interference of any third-party in the process.
What Are The Implications Of Obama Student Loan Reforms?
Obama student loan reforms have offered a great deal of relaxation to students who took out federal loans at the time of their education and have not been able to pay them back even after decades of completing their education. According to the reform introduced by him, all students who have taken out a federal loan are given the relaxation of payments up till 10% of their total household incomes. It applies to all federal financial aid holders, irrespective of their duration or time of sanctioning of the loan. The measure took off an approximate burden of $ 1.5 billion from the shoulders of recent graduates. Further details of the reform introduced by Obama said that Pell Grants will receive additional funding so that more and more financially constrained students (basically belonging to the lower economic class) will be awarded Pell Grants to complete their higher education. This step of the reform is to come in effect from 2014.