Another debt bubble is brewing, and for that reason Representative Hansen Clarke of the House of Representative introduced a new bill, Student Loan Forgiveness Act of 2012.
In short - this bill will forgive student loans (Federal Family Education Loans (FFELs), Direct Loans (DLs)) and eligible private loans for those who have paid 10% of their discretionary income towards the loan for 10 years. This bill will also cap the interest rate for DLs at 3.4%. The current rate is 3.4% BUT if legislation does not act before July, it will double to 6.8%.
I agree that college has become fairly expensive, especially for students who have to pay or have paid for college on their own. I have a solution - let’s go to college for free! Why not - countries such as Sweden offer free public and private education. Granted their taxes are among the highest in the world, but I wouldn’t mind paying 40% income tax for a free education.
Ok, back to the issue at hand…
- Student loan debt is tipping $1 trillion ($1,000,000,000,000) Yes, that is a lot of zeros…
- Average tuition for a 4-year college education has increased by 827% since 1980
- Borrowers over the age of 60 owe about $36 billion in student loans
- Average student loan debt is $25,000
Did you know?
Missing one student loan payment puts the borrower in a “delinquent” status and after nine months of nonpayment the status changes to “default”. Once the borrower is in default the full amount of the loan is due immediately. Yikes.
If you think there is a “get out of jail free card” for student loans - you are mistaken. Much like child support and income taxes, student loans usually can’t be reduced or discharged in bankruptcy proceedings.
What can you do?
There is a petition going around that will help this bill move out of the committee and into the hands of the people who make the decisions. If you want to make a change to the current student loan process, visit THIS LINK to sign the petition.
View President Obama’s Weekly Address: Calling on Congress to Prevent Student Interest Rates from Doubling
What is the average student loan debt in your state? http://projectonstudentdebt.org/state_by_state-data.php
What are your thoughts?
Do you agree with this bill… why or why not?
Thank you to one of my blog readers for asking about this topic. Keep the questions coming!