Student Loan Reform: It’s About Time

The national student debt now stands at more than $1 trillion. It marked the first time in U.S. history that college debt outnumbered credit card debt. A bill making its way through Congress aims to help Americans better deal with that burden of college debt.

In 2011, the national student debt clocked $1 trillion. It marked the first time in U.S. history that college debt outnumbered credit card debt, according to FinAid.org. 

That debt has since continued to grow at the breakneck pace of $3,000 per second. It’s outpaced the rate of inflation to the point where, even if you account for inflation, students are paying twice as much for the price of an education as they were 20 years ago. Student debt is massive enough problem to affect the nation’s housing recovery. Yet a recent survey found that, in 2012, 53 percent of college graduates were jobless or underemployed. 

(Photo Credit: c Tax Credits – Flickr)

Let that settle in your educated brain for a moment. Depressed yet? I mean, what are we paying for? A better education? Then why are so many graduates out of work or behind a cash register?

Well, lawmakers last month introduced a reform measure that could help the debt-addled public cope with the rising cost of education. Rep. Karen Bass (D-Calif.) introduced the Student Loan Fairness Act in March. Here’s a look at how you gain to benefit if it becomes law. 

It offers a “10/10” loan repayment: The 10/10 plan caps payments at 10 percent of a debtor’s discretionary income and can grant forgiveness in a decade. 

It caps federal loan interest rates: The bill proposes limiting the interest rate to 3.4 percent for federal loans. That’s a pretty attractive figure compared to the current 6.8 percent for all federal Stafford loans.

It improves public loan forgiveness: The legislation would also offer Public Service Loan Forgiveness after 60 instead of the current 120 monthly payments. That’s a godsend for anyone who works a low-wage public-interest job after graduation, giving them more time to save and less time to worry.

It allows you to refinance private school loans: Some borrowers would have the option to secure a Federal Consolidation Loan to eschew private debt.

Of course, this is all just a proposal still floating around in a House committee. If you want this to become law, there is something you can do. You can contact your representative urging them to co-sponsor HR 1330. For starters, watch this student-made documentary. Then, log on to SignOn.org to digitally sign your name to the petition. 

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