Rep. Hansen Clarke (D-MI) has introduced an exciting new bill in Congress. If passed, the Student Loan Forgiveness Act of 2012 would make a lot of changes to student loan law that could benefit millions of borrowers. Some of my favorite provisions:
- Borrowers would be able to consolidate their federal student loans and private student loans into a single federal consolidation loan to take advantage of federal student loan benefits. Right now, Direct federal loanconsolidation is only available for federal student loans. This makes private student loans very problematic.
- Borrowers would be eligible for an improved Income-Based Repayment plan, allowing for payments of no more than 10% of discretionary income (instead of 15%) and forgiveness of any remaining balance after 10 years of payments (instead of 25).
- Borrowers who work in public service would be eligible for accelerated public service loan forgiveness after 5 years of qualifying payments (instead of 10).
The bill is certainly an exciting development, and it is encouraging to see that at least one member of Congress is taking the student debt crisis seriously. Of course, the reality is we have a divided, gridlocked Congress that can’t seem to get a whole lot done, even on universally important issues such as the debt ceiling or a national budget. However, if this bill (or one like it) will ever have a chance of passage, we need to spread the word and get people talking. So please share this news and pass it on to friends and family.
To read the full text of the bill, click here.
To sign a petition in support of the bill, click here.