The passage of the Student Loan Forgiveness Act of 2012 would help students stay in college and get their degree, pay their student loans and help spur the American economy.
Students are taking on an ever-increasing amount of student loan debt, totaling more than $1 trillion, according to USA Today. This amount, for the first time, is higher than American credit card debt.
This high amount of student loan debt is starting to adversely affect students and the American economy. Twenty-five percent of 2010 college graduates are behind on their student loan payments.
If the number of students not being able to pay their loans continues to increase, the American economy could collapse in much the same manner that it did in 2008, because homeowners could not pay their mortgages. The similarities between the 2008 housing bubble and the current higher education bubble are eerie.
The Student Loan Forgiveness Act would cap payments on federal student loans at 10 percent of discretionary income per month. According to Yahoo News, after making monthly payments for 10 years, your federal student loan debt, up to approximately $45,000, will be forgiven by the federal government.
This legislation would allow graduates in the Public Service Loan Forgiveness Program to have their federal student loans forgiven in five years instead of 10 years.
These aspects of the Student Loan Forgiveness Act would allow many students to stay in college and make payments on their federal student loans instead of ending up in default.
There are worries about how this legislation will be funded and if it will add to the ballooning federal deficit. This legislation, in its own language, is funded by future appropriations available through the Overseas Contingency Operations.
The Overseas Contingency Operations budget funds mainly the military operations in Afghanistan and the military operations that occurred in Iraq in the past. It is not clear what the Student Loan Forgiveness Act would do to the U.S. budget deficit.
It’s possible that there will be extra money in the Overseas Contingency Operations budget to fund this legislation. Just as easily, the exact opposite could be true. More transparent information is needed to know whether this would negatively affect the federal budget.
One thing is certain; the Student Loan Forgiveness Act would help students get an affordable college education and improve the American economy.
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cdosh • Apr 17, 2012 at 7:45 pm
It frightens to see and read the comments. So many people that just don’t seem to care about their fellow citizens, as long as “I got mine”. Selfish, narrow-minded, and short-sighted are just a few descriptors that come to mind.
Nick • Apr 10, 2012 at 4:26 pm
More bullshit for washingtion. where are those damm jobs.. Allready.. We need jobs.. Not Acts. We have too get the workforce back too work.. Once in for all and pay off all our bills.. Not Acts. we need jobs.. Real jobs where are they already.
Calso • Apr 9, 2012 at 4:18 pm
Danny raises some valid concerns, but I’m sure he expected someone would rebut his assertion about “useless” degrees. I graduated in 2008 with a degree in English Literature. For a graduate in 2008, every degree was useless. Although the Lit degree did not directly prepare me for a future in business, I ended up using many of the skills I learned in that program create my own marketing, managing, and IT consulting business. A liberal arts degree is really great preparation for many careers, especially in this uncertain climate where the average American changes careers every few years or so. I contend that students graduating with degrees in “useful” STEM studies are not doing much better off on the whole.
But about the merits of this program: since graduating and starting a business, I’ve decided to go to law school. I would love to work in the public service—we need more people with legal training in public service. But with the loans required to attend my law school (even with a merit scholarship), it’s simply not financially feasible for me. There are many students in this situation. Although this is a time of reduced spending, etc., programs like these are money well spent. The best and brightest should have the financial means, as well as the motivation, to devote their skills to the common good. Even for those who don’t rise to the top and lack employment opportunities, it makes no sense to have (at least in the context of law school) all these highly-trained graduates working as baristas—it’s a poor allocation of our nation’s intellectual capital. Put them to work for the public good!
LadyLiberty • Apr 8, 2012 at 12:16 pm
Well said Danny and p.s. this would not only stick it to the taxpayers once again but who would it really help? The banks!
Did JPMorgan Pop The Student Loan Bubble?
http://www.zerohedge.com/news/did-jpmorgan-pop-student-loan-bubble
Jen • Apr 6, 2012 at 2:59 pm
This would be wonderful for an entire generation, maybe two. Young people would be able to participate in the economy again, having money to buy things like houses and cars that prior generations took for granted. Unfortunately it’ll never pass, and young people will suffer the consequences. This isn’t just about the cost of universities; it’s about a job market that fails to take advantage of so much educated youth. Society suffers and the young suffer too. And ultimately, the country as a whole will feel it.
Danny • Apr 5, 2012 at 4:40 pm
Great idea, stick the tax payers with your bill. Two problems here. First, there are way too many students who took 5 or even six years to finish college and lived on loans often not even knowing how me he owed. You can finish in 4 or even 3.5 years if you try. Lots of them also got (pardon me for saying) useless degrees in English lit, composition, philosophy, sociology, history, photography, art history,etc and have little or no marketable skills. So they graduate and end up at Lowes or Starbucks.
The other problem is the one no one asks. Why do universities keep raising costs? Most universities all cry poverty to justify tuition raises. Yet most if not nearly all are well off financially including NMU. Problem is that universities spend every time they get and much of it on subsidies and initiatives that are not part of its primary mission to educate. Money is poured into new buildings, new centers for X, Y or Z, new commercial projects or to subsidize faculty to teach very small classes or run graduate programs which do not generate any money due to the small number of students. But universities are addicted to these projects and they must keep jacking up tuition each year to pay for them. You get the bill, you borrow money to pay for it, get a useless degree and can’t pay it off. Now your solution is to default on it. In other words, stick the tax payers with another trillion in debt. The US is already 15. 5 trillion in debts and its going up rapidly. Just add more to it right since you have no responsibility to pay off all of the money you borrowed.