Student loan debt, which now exceeds credit card debt and is on pace to top $1 trillion in 2012, has become a hot button issue for November elections. President Obama took that issue through college campuses this week, pushing for, among other things, the extension of the 3.4% interest rate on federal student loans, which is set to otherwise double on July 1. That comes to a vote on Friday.
The issue is bubbling beyond rates, however, with a petition for the Student Loan Forgiveness Act of 2012 coming up on 1 million signatures. Provisions for student loan forgiveness already exist, it just requires you to meet certain criteria, for instance (from Stafford Loans):
a. Perform volunteer work
b. qualify for public service loan forgiveness
c. Perform military service
d. Teach or practice medicine in certain types of communities
e. Meet other criteria specified by the forgiveness program
That's how it stands now.
Some But Not All ...
The Student Loan Forgiveness Act, introduced by Congressman Hansen Clarke (D- Michigan), would go further. It would "create a new 10/10 Loan Repayment Plan (with new forgiveness provisions), cap interest rates for all federal loans, greatly improve Public Service Loan Forgiveness, and convert some borrowers' private loans to federal loans," US News summarizes.
For one, many of the loans are private -- but if the loans were all forgiven, nonetheless, what about current and future students? And what about the debt that's already been paid down; would responsible Americans get short shrift?
Would those who put off school to avoid loans or took out less in student loans and covered their schooling by working part time, living at home, or getting scholarships get a reward or more of a tax burden?
There's no arguing that it's not a problem. Americans are saddled with debt, and they are having a difficult time paying it off. The default rate for federal student loans was 8.8% in 2009, the latest year for which data was available. But what should be done?
What do you think the solution is? Should some, more, or all student loan debt be forgiven?