The Student Loan Forgiveness Act of 2012 (H. R. 4170) was introduced by Rep. John Kline (MN-2) to increase purchasing power, strengthen economic recovery, and restore fairness in financing higher education in the United States through student loan forgiveness, caps on interest rates on Federal student loans, and refinancing opportunities for private borrowers, and for other purposes.
Key Objectives:
Make student loan repayment both simple and fair
If you have already been making payments on your student 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.
The bill would ensure low interest rates on federal student loans by capping them at 3.4%.
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 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. If you make payments equal to 10% of your discretionary income for 10 years, your remaining federal student loan debt would be forgiven.
Jumpstart the economy and create jobs
The bill would create jobs by increasing consumer demand for goods and services.
Send a lifeline
The bill seeks to ensure that no one will be pushed into poverty because of a stroke of bad luck.
Americans who are behind on their payments would be eligible to enroll in the new program and bring their payments down to 10% of discretionary income.
Promote financial responsibility in higher education
Provisions of the bill itself would be financed by projected savings from Iraq and Afghanistan Overseas Contingency Operations; the bill would not affect funding for existing student aid programs.
What does it all mean?
The Student Loan Forgiveness Act of 2012 would mean a way out from the student loan trap many of us are trapped in (me included). This Act would help lessen the pain of student loans for those who believed if they received the education, they would receive the jobs. Many, like myself, owe so much in student loans that they literally rule my life. I work a job I'm not passionate about because it pays well enough to pay my loans and still live.
"This provides student loan borrowers with a second chance, those who have been struggling financially," Clarke told his colleagues on the floor of the House. " And by cutting this debt, this frees up their money to invest on their own. That will create new jobs throughout this country.
The legislation, HR 4170, would amend the Higher Education Act of 1965 by giving borrowers the option to enter the 10/10 loan repayment plan. Discretionary income, in this case, appears to be defined as any annual income exceeding 150 percent of the poverty line for an individual or family.
The legislation also would cap interest rates on federal loans at 3.4 percent, and allow graduates who enter public service professions -- such as teaching and firefighting -- to have their loans forgiven in five years instead of ten.
"While current borrowers would be eligible for full forgiveness under the plan, future borrowers would be subject to a $45,520 cap on forgiveness (based on the average overall cost of a four-year degree at a public university). The aim is to incentivize students to be mindful of educational costs and for colleges and universities to control tuition increases." While current borrowers would be eligible for full forgiveness under the plan, future borrowers would be subject to a $45,520 cap on forgiveness (based on the average overall cost of a four-year degree at a public university).
"While current borrowers would be eligible for full forgiveness under the plan, future borrowers would be subject to a $45,520 cap on forgiveness (based on the average overall cost of a four-year degree at a public university). The aim is to incentivize students to be mindful of educational costs and for colleges and universities to control tuition increases." While current borrowers would be eligible for full forgiveness under the plan, future borrowers would be subject to a $45,520 cap on forgiveness (based on the average overall cost of a four-year degree at a public university).
The aim is to incentivize students to be mindful of educational costs and for colleges and universities to control tuition increases. Many Americans who have fallen behind on payments due to illness, unemployment, or divorce face continually rising interest rates and compounding fees with no hope of escape. to student borrowers who have fallen on difficult times The bill would increase millions of Americans’ purchasing power by forgiving debt, reducing loan repayment burdens, and cutting fees and interest rates. This would free many of these Americans to invest, buy homes, and start businesses.
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