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Student Loan Forgiveness Act of 2012


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#1 Anzo

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Posted 14 March 2012 - 08:07 PM

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:

Quote

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.forgivest...-4170-bill-text
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#2 GeneticBlueprint

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Posted 14 March 2012 - 08:09 PM

Sounds great and it sounds like something I'd support, but I worry that it would affect tuition prices.

#3 zero-

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Posted 14 March 2012 - 08:11 PM

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

View Postohioguy24, on 19 January 2012 - 10:53 AM, said:

His arm was decapitated.

#4 markot

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Posted 14 March 2012 - 08:13 PM

Interest should be tied to inflation no more.

#5 -Chris

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Posted 14 March 2012 - 08:15 PM

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

View Postbest3444, on 29 August 2014 - 12:22 PM, said:

I'm hungry for some good pussy right about now

#6 Anzo

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Posted 14 March 2012 - 08:17 PM

View Postzero-, on 14 March 2012 - 08:11 PM, said:

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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#7 Sasquatch123456

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Posted 14 March 2012 - 08:18 PM

View Post-Chris, on 14 March 2012 - 08:15 PM, said:

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.

#8 CayceG

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Posted 14 March 2012 - 08:20 PM

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

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Posted 14 March 2012 - 08:24 PM

View PostCayceG, on 14 March 2012 - 08:20 PM, said:

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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#10 doa3_master

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Posted 14 March 2012 - 08:29 PM

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.

#11 Dorkter

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Posted 14 March 2012 - 08:51 PM

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.

#12 Anzo

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Posted 14 March 2012 - 09:04 PM

View PostDorkter, on 14 March 2012 - 08:51 PM, said:

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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#13 Dorkter

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Posted 14 March 2012 - 10:09 PM

View PostVennieboy, on 14 March 2012 - 09:04 PM, said:

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).

#14 Brother_Tempus

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Posted 14 March 2012 - 10:19 PM

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.

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#15 CayceG

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Posted 14 March 2012 - 10:22 PM

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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#16 Brother_Tempus

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Posted 14 March 2012 - 10:29 PM

View PostCayceG, on 14 March 2012 - 10:22 PM, said:

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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#17 CayceG

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Posted 14 March 2012 - 10:31 PM

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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#18 Brother_Tempus

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Posted 14 March 2012 - 10:32 PM

View PostCayceG, on 14 March 2012 - 10:31 PM, said:

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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#19 CayceG

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Posted 14 March 2012 - 10:45 PM

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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#20 Scoobah

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Posted 15 March 2012 - 01:03 AM

View PostCayceG, on 14 March 2012 - 10:45 PM, said:

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

#21 Dorkter

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Posted 15 March 2012 - 01:24 AM

View PostCayceG, on 14 March 2012 - 10:45 PM, said:

You're an idiot.

Probably the biggest understatement in the history of man.

#22 marioandsonic

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Posted 15 March 2012 - 01:43 AM

View PostCayceG, on 14 March 2012 - 10:45 PM, said:

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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#23 TheBladeRoden

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Posted 15 March 2012 - 01:57 AM

What if I make no income, am I forgiven or not?
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#24 Anzo

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Posted 15 March 2012 - 02:15 AM

View Postmarioandsonic, on 15 March 2012 - 01:43 AM, said:



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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#25 freneticburn

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Posted 15 March 2012 - 05:25 AM

View PostBrother_Tempus, on 14 March 2012 - 10:29 PM, said:

...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.

#26 Brother_Tempus

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Posted 15 March 2012 - 06:49 AM

View PostCayceG, on 14 March 2012 - 10:45 PM, said:

You can't demand more than 100%.

You keep thinking that .....
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#27 Brother_Tempus

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Posted 15 March 2012 - 06:53 AM

View Postfreneticburn, on 15 March 2012 - 05:25 AM, said:

   no.

Yes, the schools are prisons, we have prison guards in these schools that tazer and handcuff these children, strip search them and interrogate them , some of these chidren as young as 5, and every year the academic scores keep dropping despite the trillions of dollars shoved in this hole

...  we have a higher education system so screwed up that you need to take a mortgage as large as a house purchase to get a degree and as we are seeing the worth of said degress is dropping becuase there are too many of them now ....


Government has taken a service, which as we see in the private sector can be run profitably, and has turned it into a massive financial bubble that it now threatens to take down the very system it is trying to promote

just  like government did with housing and is doing now to healthcare .....
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#28 marioandsonic

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Posted 15 March 2012 - 08:24 AM

View PostVennieboy, on 15 March 2012 - 02:15 AM, said:

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

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#29 brucoe

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Posted 15 March 2012 - 08:59 AM

The act doesn't really do all that much, but if it does something, I'll be happy. As it is right now, my financial aid debt is killing me and will continue to kill me for the rest of my life. Sure, I can point my finger at myself and say stupid, but that doesn't change the fact that I'm horribly in debt and have no other recourse other than to keep paying for the rest of my life. This means that I will never be a contributing member of society in the economy but constantly someone who is massively in debt. I bought into the false belief that a Ph.d would make me more employable and bring economic prosperity. What I discovered is that my income isn't all that much higher than before I started the whole educational game.

Yeah, we can backseat quarterback all we want on the issue, but there are a LOT of people who are in financial dire straits right now, and the last couple of years of the economy have made things even worse. We're hitting a stage where we may end up with no way back, and if that happens, you're going to have a lot of frustrated, angry people who are beholden to government and corporations for the rest of their life because of mistakes they made in youth. Sure, you can play the conservative game of "that's your problem" but when you have a large segment of the population in a crappy situation and realizing that the system is essentially useless to them, well, you get what you get, and I assure you that prosperity and happiness is not the result. We're on the cusp of a 21st century French Revolution, and I don't think people even realize it, or are willing to separate themselves from ideological arguments to acknowledge it. Just remember, when heads start to roll, there's no cork to stop it from continuing. That's a cat that never goes back into the bag.
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#30 dreammitchconner

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Posted 15 March 2012 - 11:44 AM

I skimmed it, and it looks like the max forgiveness is about $40K.  It's not a terrible proposal, to be honest, but I'd need to see the economic analysis to understand the effect.  I'm not sure it really helps the people who need it though.  Student loan debt is crippling early on, but eventually you are able to handle the payments.  Having to wait 10 years to get the forgiveness isn't going to help the people 5 years or less out of school who are scraping by.

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#31 Bataar

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Posted 15 March 2012 - 02:58 PM

As someone with very large student loan debit myself, I have to admit, I don't see how this could work.  Obviously, loan companies wouldn't structure any loans to last more than 10 years which means a much larger monthly payment.  However, if that payment is more than 10% of your income, then it's basically the loan company paying the bill because they wouldn't be able to make you pay it?  If that's the case, I doubt there will be many companies offering loans which means it will have to be backed completely by the government which can't afford it.

#32 Dorkter

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Posted 15 March 2012 - 03:32 PM

View PostBataar, on 15 March 2012 - 02:58 PM, said:

As someone with very large student loan debit myself, I have to admit, I don't see how this could work.  Obviously, loan companies wouldn't structure any loans to last more than 10 years which means a much larger monthly payment.  However, if that payment is more than 10% of your income, then it's basically the loan company paying the bill because they wouldn't be able to make you pay it?  If that's the case, I doubt there will be many companies offering loans which means it will have to be backed completely by the government which can't afford it.
I think the idea is that the government would be the one offering these loans, not private banks.

Few private banks would offer such a low interest rate, too. But since it's a useful investment into the economy, it makes sense for the government to step in and do it right even if it costs some money, the benefit to future tax revenue will be worth it. Banks could still offer private loans for the amount in excess of 45k that a student might need.

#33 Anzo

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Posted 15 March 2012 - 06:25 PM

View Postdreammitchconner, on 15 March 2012 - 11:44 AM, said:

I skimmed it, and it looks like the max forgiveness is about $40K.  It's not a terrible proposal, to be honest, but I'd need to see the economic analysis to understand the effect.  I'm not sure it really helps the people who need it though.  Student loan debt is crippling early on, but eventually you are able to handle the payments.  Having to wait 10 years to get the forgiveness isn't going to help the people 5 years or less out of school who are scraping by.

The $45K cap would be for new borrowers. Current borrowers are eligible for full forgiveness. See the last few lines of the synopsis above.
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#34 Dorkter

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Posted 15 March 2012 - 06:58 PM

View Postdreammitchconner, on 15 March 2012 - 11:44 AM, said:

I skimmed it, and it looks like the max forgiveness is about $40K.  It's not a terrible proposal, to be honest, but I'd need to see the economic analysis to understand the effect.  I'm not sure it really helps the people who need it though.  Student loan debt is crippling early on, but eventually you are able to handle the payments.  Having to wait 10 years to get the forgiveness isn't going to help the people 5 years or less out of school who are scraping by.

I think it's the other 10 part that will help most people. Instead of having your payments dictated by the length of your loan/your total balance, they are dictated by how much you are earning. So someone fresh out of college with 50k in debt could get by on a 35-40k a year job, instead of having to struggle even with a 50k+ a year job. That not only reduces the pressure on new grads, but it also allows them to be a lot more flexible with job and career choices, which I'd imagine would tend to be good for the economy.

#35 b_m_b_m_b_m

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Posted 15 March 2012 - 07:54 PM

Shit, to get by with 50k in loans is not hard if you have a job that pays 40k/yr.

Get new grads good jobs and this student loan whining would go away. I say this as someone with 50k in loans and a job that pays pretty well right out of school.




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