New bill offers fix to student loan debts

U.S. News and World Report recently reported the total outstanding student loan debt, private and public, is about to exceed $1 trillion. The Washington Post recently reported that “student loans are the next ‘debt bomb’ that will result in another economic crisis.” With the student loan debt and college costs rising, many students may end up paying that debt for the rest of their lives.

Since most loans are made by the federal government, the interest rates are fixed at a lower rate than private loans, but there is a catch: declaring bankruptcy will not absolve you of your federal debt obligations. Rules made in the 1990s make this all but impossible, and the debt can only be cleared if a court finds that repaying it would cause “undue hardship” to the borrower.

But if you still worry about payments, there is good news. Last month, H.R. 4170, the Student Loan Forgiveness Act of 2012, was introduced to Congress. The bill calls for a 10/10 plan, where payments would be capped at no more than 10 percent of income, and work to pay off the debt within 10 years.

If passed, it would also put a cap on forgiveness at $45,520, with no caps on loans taken out prior to enactment but prior payments will be accepted into the plan.

Federal loans would be capped at 3.4 percent, lower than the present 6.8 percent.

Finally, for those who have private loans there would be a mechanism to transfer private debt into federal debt.

Also, for those who take the public service forgiveness option, loans would be forgiven after  60 payments instead of the present 120. While the military is a well-known public service option, there are currently safer options. Students can volunteer in various federal programs, such as AmeriCorps and the Peace Corps, or who devote 10 years of their life to other types of public service (such as being a public school teacher) can expect to see a large portion forgiven already. The new rule will make these positions far more desirable and pay off more of their debt.

This act should have more support and more publicity. It’s currently the only decent solution to the looming student debt crisis, and with so many students deep in debt hampering the economy, we need this to be passed as soon as possible.

Comments

Comments are closed.

Recent Editorial Articles

We aim for a neutral relationship with Student Senate

Apr. 16, 2014

As with all clubs, we strive for a neutral relationship with Student Senate. However, due to developments such as the New Orleans trip and water bottle stations among others being hammered in articles, subsequently it seems there are impressions that we hold a negative disposition toward them. We attest we have and will continue to have a neutral relationship with Senate.


Respect others despite opposite view points

Apr. 9, 2014

Walk around campus right now and you will see 50 copies of one flyer hanging up on one wall of a building here and four walls of an elevator there. Most of the flyers are campaigns for the student president and vice president candidates for Senate.


Tally a vote that will ensure a better Senate

Apr. 2, 2014

This Friday, the petitions for Student Senate are due, and the votes for the positions will be tallied shortly after.


Senate’s spending does not quench students’ thirst

Mar. 26, 2014

All of a sudden a sip of water seems to be worth thousands. Either that or a turn of the wrist is.


Better yourself, not just your GPA

Mar. 19, 2014

Everybody has heard the phrase “C’s get Degrees”; but the sad fact is that some students make this phrase their motto. Instead of being here at college to squeak by, students should be here to better themselves as people.