(Photo: AP Images / Alastair Grant, file)
Students facing heavy debts from student loans could be in luck with the Student Loan Forgiveness Act 2012, which could help improve the dilemma that many young people are currently facing.
The new bill was proposed by Congressman Hansen Clarke in March, and could mean massive savings for recent grads. As of late, many recent grads have been put in a difficult position. A struggling economy has made it difficult for inexperienced grads to compete for the scarce amount of jobs with others who have lost their jobs and re-entered the market backed by years of experience.
That is not the only issue that recent grads have had to face. Until the Obamacare plan was passed, many young people also lost insurance coverage after graduating from college and being removed from their parent's insurance plans. While many plans have been developed to help create new jobs in the economy, most overlook young people with little to no experience. Large loans also heavily impact credit scores.
With limited job opportunities, no health coverage, and no credit the future generation has seemingly been misplaced and left with piles of debt. The new Student Loan Forgiveness Act could help to remedy this issue.
According to the bill presented to congress, its purpose would be: "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."
The bill would introduce a more forgiving repayment plan, titled 10/10. It would cap repayment at 10 percent of the borrower's income and offer forgiveness after 120 payments or 60 payment for those working within public service. Those who have already taken out loans after the bill is passed would still qualify for up to $45,520 of forgiveness. As it stands now, the bill would also be open to all borrowers instead of only those who qualify for economic or partial economic hardship.
Other perks of the bill include capping interest rates on Federal Loans to 3.4 percent and making it possible to convert certain private loans under a Federal Consolidation Loan.
"Excessive student loan debt is impeding economic growth in the United States. Faced with excessive repayment burdens, many individuals are unable to start businesses, invest, or buy homes," Congressman Clark said.
If the new bill receives enough support, it could offer young people the opportunity to get back on track with the rest of their lives without the distress of large loans hanging over them.