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New Student Loan Debt Forgiveness Bill in the Works

by on June 18, 2012

By Samantha Savory

After hearing from senior citizens who were using portions of their social security check to pay off their student loan debt, U.S. Rep Hansen Clarke (D-Mich.) decided to do something about it. He like many other frustrated people knew the student loan debt epidemic taking place in America is one of the major reasons the economy has not fully recovered from the 2008 recession and went on to introduce a bill that could really help.  The question is, have you heard about it? Is it too good to be true? What’s the catch?

Titled H.R. 4170 in the U.S. House of Representatives, the proposed bill would forgive student loan debt for individuals who have consistently paid 10 percent of their discretionary income on-time each month toward their loans for 10 years. This aspect of the bill helps people who have already graduated and new grads to come.  For the next generation of college students, this bill offers a great incentive too — it proposes to cap interest rates on federal student loans at the current interest rate of 3.4 percent rather than 6.8 percent – the rate it may increase to next month if Congress doesn’t otherwise take action.

Wait, the best part of the bill is still yet to come. Do you have student loan debt and have become a teacher, work for the public sector or practice medicine in an undeserved area? If H.R. 4170 passes, your debt will be forgiven after only five years! Awesome, right?

Of all the proposals and legislation that has been passed around in Washington D.C., this seems to be the best student loan debt forgiveness proposed law thus far. I’m sure you are asking if there are any downsides? Well, only up to $45,520 in student loan debt can be forgiven if this proposal becomes law, which is reasonably fair considering the average cost to receive a Bachelor’s degree from an accredited public four-year university is in the $40,000 range.

This bill finds a balance in holding debtors responsible for what they borrowed without forcing them to become debt slaves just because they got a higher education.  This bill will let Gen Y and future generations study hard and work hard to achieve a successful and prosperous career without being burdened with outrageous debt for their entire life. If you would like to support this bill, sign this petition and write your state Representatives to encourage them to pass it.

Tell us in the comment section, do you love, like or hate H.R. 4170? If passed, do you think the U.S. economy will suffer? Maybe inflation will skyrocket? Tell us what you think!

Also, to manage all of your personal finances easier and plan smarter for the future, make sure to visit www.powerwallet.com and sign up for free!  You can budget easier, save more money and reach your financial goals faster with the power to plan!

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From → Money Management

One Comment
  1. People who can afford to pay ten percent of their discretionary income for ten years don’t need loan forgiveness. How about help for those who can’t afford to make payments at all?

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