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Student Loan Forgiveness Act of 2012

40 posts in this topic

Posted

I like certain aspects of the this bill. Allowing borrowers to consolidate private loans and cap the interest at 3.4% is a good idea. What I dislike is the 10/10 program in its current form. How is "discretionary income" going to be determined? What is to stop folks from maxing out their lifestyle and claiming that their discretionary income is like $100/month? There needs to be stricter guidelines to prevent that if they go that route. Maybe a financial counselor for each borrower to say, "Cut the cable, sell that $30,000 car." :P

My idea: It should be proportional to your total income. If they want to stick with the 10/10 idea, then a doctor making $150,000+ should pay 10% of their total income each year for 10 years while somebody else making $40,000 also pays 10%. Either way, each person will still likely receive significant debt forgiveness. It could even be dynamic if there is job loss, illness or injury.

That's just my 2 cents on the issue. I'm sure some of you will disagree.

Here are the bill's highlights:

The Student Loan Forgiveness Act of 2012 | Rep. Hansen Clarke Key Objectives:

Make student loan repayment both simple and fair

o The bill would create a new “10-10 standard” for student loan forgiveness.

  • If you make payments equal to 10% of your discretionary income for 10 years, your remaining federal student loan debt would be forgiven.
  • If you have already been making payments on your student loans, your repayment period would likely be shorter than 10 years. The amount you have already paid on your student loans over the past decade would be credited toward meeting the requirement for forgiveness.

o The bill would ensure low interest rates on federal student loans by capping them at 3.4%. o The bill would allow existing borrowers whose educational loan debt exceeds their income to break free from the crushing interest rates of private loans by converting their private loan debt into federal Direct Loans, then enrolling their new federal loans into the 10/10

program.

o The bill would reward graduates for entering public service professions like teaching and

firefighting. It would also provide incentives for medical professionals to work in underserved communities. It would reduce the Public Service Loan Forgiveness requirement to 5 years from its current 10 years.

Jumpstart the economy and create jobs

o The bill would increase millions of Americans’ purchasing power by forgiving debt,

reducing loan repayment burdens, and cutting fees and interest rates. This would free

many of these Americans to invest, buy homes, and start businesses.

o The bill would create jobs by increasing consumer demand for goods and services.

Send a lifeline to student borrowers who have fallen on difficult times

o Many Americans who have fallen behind on payments due to illness, unemployment, or

divorce face continually rising interest rates and compounding fees with no hope of escape.

  • The bill seeks to ensure that no one will be pushed into poverty because of a stroke
    of bad luck.
  • Americans who are behind on their payments would be eligible to enroll in the new
    program and bring their payments down to 10% of discretionary income.
    Promote financial responsibility in higher education

o While current borrowers would be eligible for full forgiveness under the plan, future

borrowers would be subject to a $45,520 cap on forgiveness (based on the average overall cost of a four-year degree at a public university). The aim is to incentivize students to be mindful of educational costs and for colleges and universities to control tuition increases.

o Provisions of the bill itself would be financed by projected savings from Iraq and Afghanistan Overseas Contingency Operations; the bill would not affect funding for existing student aid programs.

http://hansenclarke....ager%20SLFA.pdf

Here is the entirety of the bill - http://www.forgivestudentloandebt.com/content/student-loan-forgiveness-act-2012-hr-4170-bill-text

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Posted

Discretionary income is your net pay from your paychecks I believe.

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Posted

Interest should be tied to inflation no more.

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Posted

Didn't Obama already issue an executive order that capped payments at 10%?

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Posted

Discretionary income is your net pay from your paychecks I believe.

Is that so? Then that's good. I took it to mean whatever was left over after your bills and what not.

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Posted

Didn't Obama already issue an executive order that capped payments at 10%?

Yes, but passing a law would make it permanent. As it stands, any GOP president could come into office and repeal it with the stroke of a pen.

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Posted

I make too much and have too little debt for this to be feasible.

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Posted

I make too much and have too little debt for this to be feasible.

Reading the full text now, it appears to allow people to stick with their current repayment schedule if they so choose.

(F) a borrower who is repaying an eligible loan pursuant to 10/10 Loan Repayment under this subsection may elect, at any time, to terminate repayment pursuant to 10/10 Loan Repayment and repay such loan under the standard repayment plan, in which case the amount of time the borrower is permitted to repay such loans may exceed 10 years;

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Posted

Saw this on facebook from one of my republican friends and he seemed to be really behind it. Lets hope it gets support from both parties this time.

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Posted

I like the idea, but it kind of makes me feel like a chump for not taking out more loans. I think I probably would have gotten a lot more out of college if I'd gone and lived on campus, took a more moderate course load and worked less. I would have had significantly more than the ~10k of debt I had when I graduated, but...

I suppose I could do the unethical thing and take out further student loans even though I have no need to (I'm a grad student, currently) to do something like buy a new car, but that doesn't really sit well with me.

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Posted

I like the idea, but it kind of makes me feel like a chump for not taking out more loans. I think I probably would have gotten a lot more out of college if I'd gone and lived on campus, took a more moderate course load and worked less. I would have had significantly more than the ~10k of debt I had when I graduated, but...

I suppose I could do the unethical thing and take out further student loans even though I have no need to (I'm a grad student, currently) to do something like buy a new car, but that doesn't really sit well with me.

I wouldn't feel like a chump. You were smart to live within your means and your needs at the time. I could feel equally chumpish for paying off my $87,000 in 2 years instead of stretching it out and now being able to take advantage of this program. But, I'm debt free now instead of 10 years from now and saved a ton in interest. I'm a huge fan of the stipulation that future borrowers can only get a max of $45k forgiven, the equivalent of state schools tuition. You know, expecting students to weigh the consequences of a psych degree from Columbia vs a state school. I appreciate the balance of accountability and leniency the bill provides.

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Posted

I wouldn't feel like a chump. You were smart to live within your means and your needs at the time. I could feel equally chumpish for paying off my $87,000 in 2 years instead of stretching it out and now being able to take advantage of this program. But, I'm debt free now instead of 10 years from now and saved a ton in interest. I'm a huge fan of the stipulation that future borrowers can only get a max of $45k forgiven, the equivalent of state schools tuition. You know, expecting students to weigh the consequences of a psych degree from Columbia vs a state school. I appreciate the balance of accountability and leniency the bill provides.

Oh, I agree. I fully support this because of the huge stimulus effect this would have on the economy. I also like the fact that it would also effectively put some pressure on schools to keep tuition costs down.

I think it'd also be nice to see an additional option that allows them to defer for 5-10 years before starting to pay things back. That would give them time to settle into a career, or experiment with different options (opening a business, trying out a few jobs, moving around, etc), without worrying about servicing their student debt. The downside for them would be that the balance would be accruing interest and they'd wind up having to pay more back (by virtue of the fact that they'll probably be making considerably more with 5-10 years of experience than they would straight out of college).

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Posted

This is nothing but another bailout .. as evil as the one given to the banks, Freddie and Fannie, AIG, and GM

It will do nothing to jumpstart the economy becuase the money it would "supposedly" free up will be balanced by the loss of money the taxpayers will have to absorb.

Transfers of wealth do not grow the eeconomy

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Posted

Damn. I was sure BT was going to approach this one as such:

"The govermnent [this misspelling is intentional] should be forgiving ALL federal student loans because they are taken out on the backs of the taxpayers. This is the government returning stolen money to the rightful owners."

Given his post, I'm pretty confident that he is 100% okay with the government issuing loans for tuition.

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Posted

Given his post, I'm pretty confident that he is 100% okay with the government issuing loans for tuition.

No, abolish Dept of Education, abolish student aid, abolish public education, abolish government regulations on education ...

Education is a service and thus falls under the realm of the private sector..... as we see with the ongoing education bubble { which will explode should this bill pass, becuase colleges are going to demand money up front now] and the dismal status of wretchedness that is public K-12 .... we can see government is too inept to handle education

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Posted

Colleges DO demand money up front.

OMGZORZ!! THE EDUCATION BUBBLE MUST HAVE POPPED!! Clearly you didn't go to college.

Or any school, for that matter.

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Posted

Colleges DO demand money up front.

They are going to demand more ... even if they have to raise prices ( a guaranteed certainty) to get it.

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Posted

You can't demand more than 100%. Every semester colleges demand that you pay your tuition that semester in full before you are registered.

And guess what colleges have the highest tuitions?

Private ones.

You're an idiot.

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Posted

You can't demand more than 100%. Every semester colleges demand that you pay your tuition that semester in full before you are registered.

And guess what colleges have the highest tuitions?

Private ones.

You're an idiot.

lol

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Posted

You're an idiot.

Probably the biggest understatement in the history of man.

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Posted

You're an idiot.

You're realizing this now?

Anyway, looks good to me. I've got about 50,000 in debt, so anything that takes some of that off my back is ok by me.

Would this also apply to private loans, though?

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Posted

You're realizing this now?

Anyway, looks good to me. I've got about 50,000 in debt, so anything that takes some of that off my back is ok by me.

Would this also apply to private loans, though?

As it is written now, you would be able to convert your private loans to the 3.4% federal loans.

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Posted

...abolish public education,...

:facepalm: no. Our public education isn't perfect but the main problem with it is all the worthless kids that don't take advantage of it. School administration (NOT the teachers) does need to be cut AT LEAST in half but our system is only broken because of a bunch of out of control asshole kids would rather go out muggin and thuggin or interrupt class because they don't get enough attention or something. I could probably count DAYS of lost class time because some worthless kid was being obnoxious and wasting everyone's time. Not to mention these kids would drag everyone down with them making it seem OK or cool or great because they don't have to do any work while some clown is clowning around. When you have a class full of people who want to be there it's a lot more productive. I will say that from my short college experiences those truly ARE worthless and seem more like a business than an educational institution.

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