The federal student loan program, started in 1965, allows students to borrow now for college and pay back later when they have a job. Student loan debt has surpassed credit card and auto loan debt for the first time, surging to over $1 trillion.
From an AP story:
“With a still-wobbly jobs market, these loans are increasingly hard to pay off. Unable to find work, many students have returned to school, further driving up their indebtedness.
Average student loan debt recently topped $25,000, up 25 percent in 10 years. And the mushrooming debt has direct implications for taxpayers, since 8 in 10 of these loans are government-issued or guaranteed.”
The Democrats have come up with a solution to the problem – Forgive the debt.
‘Forgive’ the debt. A euphemistic way of saying, “Never mind; you don’t have to pay back the money you borrowed. And, oh, by the way, you’re going to vote for us, right?”
Rep. Hansen Clarke (D-MI) has introduced HR4170, the Student Loan Forgiveness Act of 2012. To be fair, the Act does not outright wipe out student loan debt. But, if certain conditions are met, a debtor could have up to $42,520 in student loan debt eliminated.
The highlights from the Act:
A) The bill would create a new “10-10” standard for student loan forgiveness.
B) If you make payments equal to 10% of your discretionary income for 10 years, your remaining federal student loan debt would be forgiven.
C) If you have already been making payments on your students 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.
D) The bill would ensure low interest rates on federal student loans by capping them at 3.4%.
E) 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.
F) 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.
The Democrats claim forgiving student loan debt would jump start the economy and create jobs. They say it will increase millions of Americans’ purchasing power, freeing them to invest, buy homes or start businesses.
What this debt forgiveness would really be is a blatant transfer of wealth disguised as ‘stimulus’ by the Democrats. Even people who could not go or chose not to go to college would be forced, via taxes, to subsidize the debt incurred by those who went.
That’s the one thing no one in favor of debt forgiveness will talk about. The money has been spent and, if it is not paid back, who will be having to take the loss? The answer – The taxpayers. But, since 49.5% of the country doesn’t pay income taxes, the Democrats see this as an easy scheme to entice students into supporting them at the polls.
Granted, student loans can take years to pay back and be a financial burden. But, no one forced them to take out a loan. And taxpayers shouldn’t pay for it.