Hansen Clarke: Congressman Introduces The Student Loan Forgiveness Act of 2012

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Student loan forgiveness is a hot button issue in America right now and there are many voices on each side. One side believes that given the state of the economy and the vanishing of middle class job opportunities, we need to shift towards a more forgiving approach such as loan forgiveness or Income Based Repayment (IBR). On the other side you have people who believe that students should be able to pay back their debt and be responsible despite oppressive external factors.

Here are some not so fun facts from the U.S. News Student Loans Ranger blog about student loans and the necessity of going into debt to function as an American citizen:

Total outstanding student loan debt officially surpassed total credit card debt in the United States in 2010, and is on track to exceed $1,000,000,000,000 during 2012.

Excessive student loan debt is impeding economic growth in the United States. Faced with excessive repayment burdens, many individuals are unable to start businesses, invest, or buy homes.

Because of soaring tuition costs, students often have no choice but to amass significant debt to obtain an education that is widely considered a prerequisite for earning a living wage.

On March 8, Congressman Hansen Clarke (D-Mich.) introduced H.R. 4170, the Student Loan Forgiveness Act of 2012.

Clarke exclaimed that the bill, “provides that if a student loan borrower makes payments equal to 10% of their discretionary income for a period of ten years the balance of their federal student loan debt will be forgiven. This provides student loan borrowers with a second chance for those who have been struggling financially and by cutting this debt to freeze up the money to invest on that will create new jobs across the country.”

The congressman had the House’s full attention as he passionately stated, “It’s time for congress to stand for the rights of student loan borrowers. It’s time to forgive student loan debts.”

Regardless of where you stand on the issue, the fact remains that student loan debt has been destroying an entire generation: “an entire “lost generation” is not starting families, buying cars, getting mortgages or otherwise contributing economically in the ways previous generations did. And by all accounts, the problem is actually way worse than even shrill news reports indicate- young people are drowning in a sea of debt before they ever have a chance to pay back the first cent.”

If the bill is passed interest would be capped at 3.4%, half of what it is currently, and would go into effect later this year.

It is thought that this bill would still hold borrowers responsible to pay back their loans and create opportunities for the 25-40 crowd to stimulate the economy.

Besides, if the economy really is getting better and the elusive good paying jobs resurface, then borrowers will be able to pay back most of their debt, right?

One person who was fortunate enough to receive a full ride is really ticked about the plan and posted on YouTube:

“Wow, good thing I did the responsible thing and got both my degrees on full scholarships. If I’d known about this garbage, I’d have gone to an Ivy. So much for personal responsibility. Maybe I’ll go risk all my savings in stocks I don’t understand. Surely Obama/Bernanke will come to my rescue. Most of us are taught personal responsibility when we’re growing up. Then we get older and realize most of the adults who taught us these values were busy ripping each other off our entire lives.”

But another person fired back after finding this individual to be a bit snooty:

“Lucky you. Lots more of us hardworking folks that had 4.0s all through college, have a decent sum of student loans and pay over 60 percent of our monthly income to student loans highly disagree with you. It’s not like it’s a free ride, it still requires ten years of payment. Please get off your high horse and have some empathy for honest work.”

Where do you stand on the issue? Do you think that most people are capable of finding good paying jobs to pay back their debt without reforms such as this one? Do you have a personal story that you would like to share?

Hansen Clarke: Congressman Introduces The Student Loan Forgiveness Act of 2012
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  • James

    I have a BA in TV/Video. That and $1.50 will get me a coffee at 7-11. I also fell for the lie that getting a degree will help better my chances of getting a career. My college–Hofstra had a so-called “Job Placement Resource Center,” but the majority of the info there was seriously outdated, and was no help at all. I did everything I could to try to better myself. I now work as a bartender at a restaurant chain, with no hope of ever making anything of myself, or of ever being able to pay back my student loans. If I could do it all again, I would have never gone to college. At least then, I’d be in the same place I am now, but without a student loan hanging over my head like the sword of Damocles. Perhaps if I were black or Hispanic, I could have taken advantage of some social program to help me land a job in my career field like the one NBC has, but sadly, I am Caucasian.

  • s

    I would be happy to pay back my student loans, plus interest. But what I cannot afford are the oppressive late payment fees and penalties that has made my $25,000 debt a staggering $55,000. Especially since they were incurred when Wells Fargo, after I had consolidated my loans with them, split them up again and sold them to other companies who then sold them to even others! I had no idea who had my loans, and which one of the dozens and dozens of companies who claimed they did, but would not provide me with even the AMOUNT of the loan, nor the date, nor the college! Refused to provide even a shred of proof that they were legit. Add to that the pitiful lack of insight from the supposedly know-all government financial aid loan tracking- who claimed that my loans were still with Wells Fargo! How is this LEGAL? To supposedly consolidate your loans, then split them up and sell and hide them from you, and be penalized when you can’t find who legitimately does have your loans?

  • LoL at Rich Kids

    So funny all these rich kids coming on here pist off that the government paid for all the normal people to attend college and saturate what they feel is their exclusive right. Student loans are no different then business loans. If you are a success the bank gets to rape you for 1/3 of your life. If you are not a success then the bank should lose the bet. Once they made private loans just like federal loans without federal loan benefits they destroyed the system. It ultimately funnelled enormous amounts of money into the college system, but instead of lowering cost those greedy bastards raised the cost of tuition so its time for a correction. Same old story just a different day. Student loan bubble

  • Dean

    I went to a so called college, whatever it’s called in your area, but City College is most everywhere. I check off something that disqualified me for a loan, not that I knew it but they did and you can see where they crossed it out and checked off what would get me the loan, I never knew I never approved until a question came up later and I tried to get it fixed. They promised a 95% placement rate, but no one in the classes before me, my class, or the classes after me was even sent out for an interview. I refused to pay the loan until the government investigated the fact that they changed the app, and the fact that they promised jobs to graduates. It grew from $4,000 to $40,000 because the government would shop it around and charged ridicules fees because they have a reputation of doing everything it takes to get the money.
    I’m now on full disability and was told that the loan will be forgiven, but I’m still after a degree or two, and need to find out where I can get student loans, real loans for a real education that I have no problem paying back because they give me the education they promised.

  • Dean

    If any company/organization pulled some of the crap these people do they’d be out of business in no time, and the student loan people love the fact that they are hated and pull stuff no one should be allowed to do.
    Their loans should be no interest/no penalty loans and rewards for on time and early payoffs.
    Considering the hell holes they give money to they should answer to the fact that they give money to these deadbeats.

  • jake reynolds

    its funny how many people forget the people who actually come from a single parent home, or they were told that their parents make too much and they can not get financial aid so they had to take out loans. I bet 90% of people who don’t want this bill to be passed had an easier road to college and thereafter then the people who needed to take out the money! Yes miracles happen, but what chance does a young black man from philly, or nyc or a major city have to get a job with out a degree. Or get aid when they are told their parent makes too much. I’ve read alot of people who say i paid back my loans, or i did this or that, but was that before or after economy tanked. Now the jobs that used to be there aren’t and the fact is people do need help. People are so quick to assume that loan borrowers who owe a lot of money are irresponsible and they are not, they are coming out with 4 year degrees in a time where now that’s as good as a HS degree. Countries that actually don’t have the problems this country has have free, or much more affordable degree options.

  • jake reynolds

    And if i hear any one else say why didn’t you just pay for college, i ll look at you and say if i was able to make enough to pay for college, do you think i d actually be attending school? Its not easy to pay for college at a university where the cost of everything is 20,000 and every where you apply wants you to have experience, but you don’t have that because there is no one that will hire you.

  • chris

    welcome to the final stages of capitalism…

  • dre

    I wonder why did the government stop bankruptcy. Most people would file and didn’t pay for their student loans. It’s funny how people judge other people situation. I believe everybody need a forgiveness sometime.

  • Brenda H.

    It sounds like several are frustrated with numerous comments that have been made throughout this discussion. I would like to add that everyone is entitled to their reason(s) for stating their argument for what congress is proposing. I personally would like to see this go through and my reasoning is as follows: I did not come from money, like some of you apparently were fortunate enough to have that luxury. I have worked full time since I was 15, so I also was not a welfare recipient like some will automatically assume. I am just a few months shy of my 39th birthday, I have never been married and I am a single mother of 2 special needs children (one is 19 and the other is almost 16). I worked 3 part time jobs to put myself through college to obtain my nursing degree back in 1999 and because of the income from the 3 jobs, I received $450.00 in grant money and the remainder of my degree came from student loans. Now I by no means was rich as we were living from check to check and barely making ends meet, but we did it on our own. I have hurt my back twice now in nursing as an LPN (and yes my student loan payments are $250.00 a month for the $30,000.00 that I had to borrow and consolidated for a lower rate) and this last time it caused permanent nerve damage. To make a long story short — I have foot drop, so my nursing I knew would I would not be able to continue until retirement.In 2009, I went back to school to obtain my Bachelor’s Degree in Corrections (which I will be graduating next month) and low and behold Minnesota State is the only University in Minnesota to offer the degree, so let’s see, oh I received a $300, $250, and $300 grants and the remainder of the $45,000.00 is all in student loans which is going to put my payments roughly at about $600-$700 per month. I guess I can try to figure out what I will live off of because I will be making less in Corrections than I am currently in nursing. You start out on the bottom like in any other profession, which is about $6.00 less an hour than what I am making now. SO with that said — YES I do support either lowering my payments to something I can truly afford to pay like $100 a month until I am on my feet and working something decent and making decent money (which I could careless if that loan gets extended to 80 years — as long as the payments are realistic). OTHERWISE I will go right into getting my Masters Degree and leave it all in deferment until I am done with that degree.I don’t feel that Congress is giving people a “free” ride — I feel like they are realistic to what is going on and are giving people a chance so that they can make it out of college without having to ruin their credit by filing bankruptcy. SOME professions like nursing for instance, if you file bankruptcy on your student loans, the Board of Nursing can yank your license either by suspension or revocation until you make good on your loans, same with defaulting on them. I don’t know what it is for other “professional” degrees, but maybe that is one of the things that Congress is taking into consideration, I don’t know, I am not into big politics. Thank you for letting me rant!!

  • Kris

    Something needs to be done about private (non-federal) student loans. Deferments/forbearances are often not allowed on private student loans, leaving the borrower in big trouble if laid off/unemployed. Graduate schools sometimes run credit checks so if you fail to make payments you cannot continue your education.

    Some colleges require poor students to take out private student loans through the financial aid office if the federal loans don’t cover the cost. I know people who have amassed over 100k of debt this way as teenagers!

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  • mdc

    I am 56 years old who helped our son to go to school. We cosigned with the loan of $20,000 thinking that we will be able to help him pay for it since we had a flourishing business at that time. Well, the real estate business went bankrupt and my son is working a minimum wage and struggling to pay the student loan. My husband and I are being harassed continuously for being late or not paying and so is our son. I am not asking for a handout, but considering what the government has wasted by giving millions of dollars to companies they like that have gone bankrupt like Solyndra, auto companies, Wall Street bail outs and many others. And how about the money waster by GSA? Combining all those wasted money would probably amount to alot of money. How about giving all tax payers the money they have wasted to these defunct companies. That would help not only pay off some of the student loans but pay for gasoline that is so high or ease some months of home mortgages. And another thing, why is this coming out now? Is politically inclined?

  • ihatestudentloans

    The government has no problem bailing out the banks when they were in trouble. So if they want to help me out, I will welcome it.

  • patrick

    Fundamentally, I think Student Loan Forgiveness Act is a good idea. My wife and I don’t have children, yet I have paid very high real estate taxes without complaining because I acknowledge the importance of educating the next generation. You’ll note primary education is mostly funded by state & local governments via state allocations and property taxes. I have a basic problem with the federal government (i.e. Goals 2000 a la Clinton) getting its hands any deeper in education. That said I will reserve any judgment pending an explanation of how the Student Loan Forgiveness Act will be paid for. We simply cannot allow this program or any other to increase the federal budget deficit and I will not support this program if it requires cut to Social Security, Medicare or Defense (the primary responsibilities of the federal government). Congress should be able to find a way to pay for this as they did with ObamaCare

  • mema

    I have worked since I was 15. I went to college and made it through 2 years debt free. Then it was like they were handing out candy and most everyone stood in line for grants or loans. Went to work and tried to find a high paying job. Found mediocre jobs. Decided to go back to school for a Masters(everyone tells you that will solve everything) Incurred more debt. Went to work again. Worked in social services and ministry. You don’t get rich in these fields. Did the Americorps. Serving a rural area in ministry. I will never be able to repay my loans. I have made payments, but the current system creates no way to make progress. The economy is so down, there are fews jobs where I could make enough money to pay off the total debt. I will try to repay what I can but we need some relief. If they eliminate the interest and get us on a good payment plan, I would guess a lot more of it could be paid back.

  • http://www.wix.com/davidrwollenhaupt/thefineprintphotography1 David Wollenhaupt

    I continued my education while serving in the USNavy, which I am very proud of. I started my BS. degree in Hospital Management and went on to get my MBA in business while having promoted to E-5. I wasn’t making that much money, this was 1977 to 1988, and I PAID back all of my student loans on my own . I did not have the GI Bill or any other assistance, So I would have to vote NO on this. I know people are strapped. Oh by the way I have been unemployed for over 2 years. So we are living on one income of a Radiology Technologists. There are so many defaulted koans already, this needs to be DEFEATED!

  • Amanda

    My question is, why are people going to school that costs that much? I went to a school that was cheap, got out with minimal debt due to scholarships and paying on my loans with the Federal Work Study money I made while I was in school. In addition, I didn’t get my Master’s Degree until I worked for an employer who would pay it. I was debt free from college loans within 10 years of ending my education. Think about the level of investment before racking up $120K in loans for an education that really isn’t much better than my $24K education (that I was in for 6 years!)

  • Matt

    I may receive some spiteful replies, but I am going to give my  “If I can do it, so can you” anecdote. Like a small percentage of the population, I am very blessed to come from a good family that would have happily picked up the tab for school. Nevertheless, I enlisted in the military at 17 and secured the GI Bill after four years of honorable service and a substantial amount of time in harm’s way. When I left the service, I elected to attend a cheaper state school (the old GI Bill was not as comprehensive as the current one, sadly) and worked through college, actually managing to save money in my 3.5 years. 

    Anticipating counters – yes, I know the job market sucks. I’m suffering with you, receiving many a rejection letter if receiving anything at all. The search continues. Yes, the military is not for everyone, but there are other service programs that will help pay for school or help repay your debt. Yes, I understand that the private school you attended for four years has The Premiere B.S. in Underwater Basket Weaving, justifying the 120k in student loans. (And if you attended a for-profit school, I don’t even want to hear from you. You discovered your so-called ‘”college” by clicking a banner ad on Facebook. Thought you were getting a Bachelor’s in 18 months online? Give me a break.)

    Inevitably, this is still a transfer of wealth from Group A to Group B. Without surprise, all of the classic clichĂ© characters have made an appearance – “greedy bankers,” “evil, mustache-twitching millionaires,” and “soulless academic advisors” on one side, “single mother working two jobs just to get by,” “4.0 GPA greatest student of all history times infinity” (sure have heard from a lot of those on this forum,) and “wide-eyed innocent kid with dreams of college education” on the other.

    We are Americans. We embrace personal responsibilty. I’m sorry for your predicament, but this bill is not the answer. 

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