The William D. Ford Direct Loan program or now more commonly known as the Obama Student Loan Forgiveness program is a part of the Health Care and Education Reconciliation Act of 2010. This Act provides a way for students to reduce or eliminate their student loan. As this program is open for all student loan borrowers to apply for, not everyone is eligible for it. Review below how to qualify for the Student Loan Forgiveness Program.

You Must Have a Federal Student Loan

First off, it is important to note that private student loan borrowers are not eligible for this debt forgiveness program. This only applies to federally backed student loans.

You Must Make Payments

You can’t just tell the government you can’t make the payment on your loan. You have to do some contribution or good faith payments for this to work. As they realize not everyone can pay a certain dollar amount or percentage of their loan, the government has worked out three repayment plans to fit your budget. Here is a quick overview of each repayment plan:

• Income Contingent (ICR) – You will make payments based on your income, loan balance, interest rates, and your family size.
• Income Based (IBR) – This loan is based just on your income and family size. Your student loan balance has no bearing on the repayment. You would be responsible for contributing 15% of your income towards this plan.
• Pay As You Earn (PAYE) – This plan requires a 10% payment of your income towards your student loan debt.

After signing up and paying on these loans as agreed, you would be eligible for a student debt forgiveness after 20 years for any remaining balance.

Public Service Loan Forgiveness Program

Anyone working in a qualifying public sector or not-for-profit in a full-time position may also be eligible for the student loan forgiveness program. You would earn this in only 10 years as opposed to 20 years. You must join one of the above three payment plans to qualify. A few qualifying jobs include:

• Work with a 501(c)(3) organization
• Employed by a public school
• Hold a local, state, or federal government position
• Serve full time as a Peace Corps employee

To verify your eligibility and get the ball started on your student loan forgiveness application, you need to speak with a representative from your student loan servicer. Be prepared to show proof of your income and employer.