It's time to forgive student loans, U.S. Rep. Hansen Clarke says

[웃 910]

It's time to forgive student loans, U.S. Rep. Hansen Clarke says

President Barack Obama signed a law Friday extending a cap on federal Stafford student

loan

interest rates -- but U.S. Rep. Hansen Clarke, a Detroit Democrat, argues it doesn't go far enough.

He's hoping the more than 1 million people who have signed a petition supporting a bill he's championing will force Congress to make more meaningful reforms to the student loan system.

"The demand is to change the system," he said June 25. "We've got to keep the bubble from bursting and help people who are swamped by debt. I would like to forgive a lot of these

loans

."

Clarke's bill, which is in committee in the House, would do just that.

Under his plan, people could have federal loans forgiven if they paid 10% of their disposable income -- which is basically any income exceeding 150% of the federally set poverty level -- for 10 years. The plan would apply to undergraduate, graduate and parent loans. Those in public service jobs could have loans forgiven after five years.

"Nobody's getting a free ride here," he said. "They have to pay on the loan before they are eligible for forgiveness."

The bill would cap the total amount eligible for forgiveness at $45,000.

Clarke also would set up a program to allow some private loans to be converted to federal loans, making them eligible for those forgiveness standards.

If the bill passes, those who currently have student loans and have been making payments for 10 years would be eligible for forgiveness. Clarke's bill would keep the interest rate at 3.4% for federal loans indefinitely. The version signed by Obama keeps the cap, which expired July 1, for only the next year.

Tonya Markel, 28, graduated from Michigan State University six years ago and now works as a bank teller. She has been making payments on more than $40,000 of debt.

"It seems like I can't get out from under this," Markel of Detroit said. "There's a lot of people worse off than me that can pay some, but can't pay all this. I think this is a good idea."

During the bill signing in Washington late Friday afternoon, Obama said the interest rate cap is a good first step.

"(Higher education) can't be reserved for a privileged few," he said. "It's not enough to keep

interest

rates

from doubling. I've asked Congress to (revamp) financial aid."

U.S. Rep Gary Peters, a Bloomfield Township Democrat, was a lead sponsor of the bill.

"We've still got a lot of work to do to make college more affordable, but preventing student loan interest rates from doubling is a step in the right direction," Peters said in a statement.

http://www.freep.com/article/20120707/NEWS06/207070365/It-s-time-to-forgive-student-loans-U-S-Rep-Hansen-Clarke-says?odyssey=mod|nextstory

[slim 1,533]

Where's all this "free money" coming from?

Perhaps soon we'll see a bill to forgive credit card debt as well. Maybe we'll even have free mortgages! Why should people have to pay their bills? That's just crazy!

[X Factor 1,112]

Insanity at its finest

[Póg mo 1,749]

Where's all this "free money" coming from?

Think of it as a tax cut. Forgive student debt and allow people to spend the money saved on stimulating the economy, which in turn leads to higher tax returns. People who have their debt forgiven are also able to work for less money, which in turns helps small businesses to be able to afford to take on more staff, which in turn stimulates the economy.

Alternatively, we could just cut taxes on the wealthy, and then hope they don't find some place else to stash their cash.

Perhaps soon we'll see a bill to forgive credit card debt as well. Maybe we'll even have free mortgages! Why should people have to pay their bills? That's just crazy!

There aleady is. It's called bankruptcy protection.

[Póg mo 1,749]

People really need to understand that while they may not personally hold student debt, they will invariably end up paying higher prices for professional services, precisely because anybody with an outstanding debt of say $50,000 will need to find employment where they can afford to keep themselves while servicing their outstanding student debt. If student debt only effected a small percentage of university graduates, this probably wouldn't be a problem, but seeing as 2/3 of students graduate owing on student loans it is a very large problem.

[Captain Oates 911]

People really need to understand that while they may not personally hold student debt, they will invariably end up paying higher prices for professional services, precisely because anybody with an outstanding debt of say $50,000 will need to find employment where they can afford to keep themselves while servicing their outstanding student debt. If student debt only effected a small percentage of university graduates, this probably wouldn't be a problem, but seeing as 2/3 of students graduate owing on student loans it is a very large problem.

jeez I will have to clip my own poodle as they say in SF

[slim 1,533]

A tax break? Wow!

What about all those who were smart enough to NOT take on huge debts they couldn't afford? Where's their tax break?

but seeing as 2/3 of students graduate owing on student loans it is a very large problem.

Exacerbated by the fact that they get good jobs like bank teller.

College is not a good financial decision for everyone. It's time we start accepting that and stop churching it up as some kind of wonderful happenstance that we must all be a part of. If you WANT more education you should pay for it. Don't moan and cry when it doesn't work out for you. It's an investment just like anything else. Investments don't always pay off.

[Captain Oates 911]

When I was 26, I applied for a college grant. I had a wife and two kids and a rented house.

The grant was 25% larger than average wage ! I was rich for the first time ever and I only did 18 hours per week at lectures (max)

I didn't have a loan - it was a grant

A few years later, I was paying tax at $48k per year. The government got their money back and then some.

I was lucky and they were lucky

The trick is to tie the grants to getting a big return on it for the taxpayer

It could be a profit center for taxpayers if its done right...with clawbacks for drop-outs

Keep the bank's snouts out of it

[Danno 1,228]

What about those who just paid off their student loans, do they get a refund?

[웃 910]

What about those who just paid off their student loans, do they get a refund?

IDK but they implemented an Income-Based Repayment plan in 2009/10 where the lower you make the less you pay.

If I'm not mistaken the previous payment plans were done over 10 years with absurdly high payments if you had lots of debt. Under the previous plans you can be 22 years old fresh out of college with no job and be expected to make an $800 monthly payment for the next decade. How can you afford a mortgage on top of that payment and all other living expenses?

The new Income Based Repayment plan is over 25 years vs. 10.

The benefits are you pay a lot less per month. In fact if you make less than $20,000 you will pay ZERO every single year.

On the negative side you pay for a longer period of time, more interest, but no matter what the student loan debt is forgiven after 25 years. So technically if you don't make a lot of money you won't pay a dime back or you'll only pay a small portion back.

[Póg mo 1,749]

What about those who just paid off their student loans, do they get a refund?

Who said life was fair? Sometimes it makes sense to help the majority at the expense of a smaller minority. If they want to be angry at somebody, then I suggest they find out who gave out the loans in the first place and demand compensation. Not doing something that would help the greater US economy, at a time when it needs all the help it can get, is akin to cutting off your nose just to spite ones face. The people who paid their student loans will at least help ensure their incomes are threatened by a faltering US economy.

[Mr. Big Dog 10,747]

I graduated in 1996 with a Master's Degree and owed - let's see - oh yeah, nothing. Now, where I went to school not everyone would qualify to attend a university. You had to show the grades in High School to get there in the first place. But if you did, your Master's Degree could be earned absolutely free of charge. In fact, based on the income situation of your parents, you could actually qualify for financial support payable monthly of which you would - at worst - owe 50% back starting two years or so after graduating at 0% interest. You could further reduce that burden by either graduating on top of your class or by paying back a lump sum when payments start coming due. It's a good deal all around. Not only does it enable people from any economic background to attend and graduate from a university but it also ensures that the national economy has a steady supply of well educated young people. It works. It keeps a national economy strong and is one of the best tools in terms of social mobility - something that's vanishing scarily fast in what used to be the land of opportunity. You just have to get your national priorities right.

Edited July 7, 2012 by Mr. Big Dog