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What Is The Obama Loan Forgiveness Program And Is It A Scam?



Biden’s student loan forgiveness plan was struck down. Federal student loan payments resumed in October 2023.
Learn about important latest measures from the U.S. Department of Education to help borrowers as interest accrual and monthly student loan payments are set to resume.
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Question: I got an unsolicited email from the “Obama Forgiveness Program.” It said I could wipe out my $20,000 in student loans. I deleted the email, figuring it was just a scam. But now I’m, wondering: Is it? I keep seeing ads in my Facebook feed that say the government has programs to forgive student loans. But the ads aren’t from the government. What’s going on here? Is this a legit way to get out of student loan debt or not?

— Adam in Louisiana

Howard Dvorkin CPA answers…

You’re right, Adam — on all counts.

Yes, the federal government wants to help you pay off your student loans. And yes, scammers are using those government programs (and President Obama’s name) to steal your money.

Unfortunately, student loans are such a huge problem, there’s no simple way to help everyone. Americans owe more in student loans ($1.2 trillion) than they do on their credit cards ($847 million). The Department of Education has created five distinct programs, each with their own requirements and none of them very easy to navigate.

How do you know if Obama Student Loan Forgiveness is a scam?

Like filing your taxes without going to an accountant, you can apply for these programs by yourself. But just like your taxes, it can get confusing in a hurry. That’s why you’re seeing all those Facebook ads and getting all those emails, Adam.

Specialty businesses have sprung up to help you walk through the process. Of course, just like accountants, they want to be paid for their services — and just like accountants, their prices vary. Many are honest, but some are con artists. (Over the summer, NBC News reported on the “Obama Loan Forgiveness Program” scam.)

How do you tell the difference between good and evil? First, never pay an upfront fee. Second, never pay thousands of dollars for a service that should cost a few hundred. Third, make sure the company has been around for a while and has good references and satisfied customers.

One reason I started was to partner with highly rated companies that will help Americans get out of debt without ripping them off. If you call (855) 996-9768, you can fill out a free debt analysis and talk to a trained professional who will offer you all your options — and then you can choose. No high-pressure sales tactics, and no “Obama Forgiveness Program.”

Other options for student loan relief

There are many different paths toward student loan relief. Whether you want to lower your payments or have your balance forgiven, explore your options to see what’s best for you.

Student loan repayment programs

These range from the standard repayment plan (the most basic) to the graduated repayment program (which has nothing to do with getting a diploma) and will change the terms of your loan so your monthly payments won’t force you into default. There are also income-driven repayment plans. These programs — called income-based repayment and income-contingent repayment — adjust your payments as a percentage of your discretionary income.

Student loan forgiveness programs

Public Service Loan Forgiveness (PSLF) will wipe out the balance of your federal student loans under very specific conditions — which start with choosing a profession for the “public good,” like firefighter or teacher. If you work full time in a job like this, you could be eligible to have the remaining balance of your loans forgiven after you make 120 qualified payments, which takes about 10 years.

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