With student loan debt in the U.S now surpassing credit card debt at around one trillion dollars, Congressman Hansen Clarke, D-Mich., has brought forth a piece of legislation to avoid another economic meltdown similar to the one created by the mortgage crisis of 2008.
Clarke’s plan, accordingly named The Student Loan Forgiveness Act of 2012 or H.R. 4170, would forgive students in debt up to $50,000, with the stipulation that borrowers pay at least ten percent of their monthly income towards their debt for ten years. When this condition is met, the above mentioned amount would be forgiven.
Having student loan repayments lowered to ten percent of their incomes “would be so good for so many people”, according to Michael Jaafar, attorney and radio talk show host.
Jaafar has seen his share of student loan nightmares and pointed out that lenders are “completely unrestrained” because struggling borrowers are unable to discharge the debt in bankruptcy.
Provided certain criteria is met, most debt is dischargeable in a bankruptcy, such as credit card debt and even mortgage debt.
During his weekly radio talk show, Jaafar says he fields a growing number of calls related to student loan debt and often tells callers that owing student loan debt is a way that lenders “own your life” because there are few options available other than paying up.
“It’s very scary,” said Zaina Marie, who was able to secure a job at a top automotive manufacturer after graduation. Marie noted that it can still be “difficult” to pay the debt even with a good job. “I can’t imagine how others are able to do it without a job,” she added.
The student loan restructuring plan has received plenty of support online.
A petition site, signon.org, has gathered nearly one million signature in support of the bill.
Clarke believes “the people” will ultimately be responsible for the bill’s passage.
“There’s growing support,” Clarke exclaimed. “But here’s why… because people are demanding that Congress take action to cut and forgive student loan debt.”
To sign the online petition, visit www.signon.org.
For more information about the bill, visit www.hansenclare.house.gov