This new legislation will be a combination of two bills from the 112th Congress: Rep. Hansen Clarke's Student Loan Forgiveness Act (H.R. 4170), as well as The Graduate Success Act (H.R. 5895).
This legislation would establish a new “10-10” standard for student loan repayment as the new standard repayment plan. In the “10-10” plan, an individual would be required to make ten years of payments at 10% of their discretionary income, after which, their remaining federal student loan debt would be forgiven.
The Student Loan Fairness Act would also combat crushing interest rates of public and private loans by capping federal interest rates at 3.4% and allowing existing borrowers whose educational loan debt exceeds their income to convert their private loan debt into federal Direct Loans, then enrolling their new federal loans into the 10/10 program.
This bill works to jumpstart the economy and adds to the public service workforce by rewarding students who enter public service professions and work in underserved communities with a reduced period for loan forgiveness.
The Student Loan Fairness Act also sends a lifeline to student borrowers who have fallen on difficult times. The bill seeks to ensure that no one will be pushed into poverty because of illness or loss of their job and extends interest-free deferments to unemployed borrowers of unsubsidized federal student loans and those enrolled in the “10-10” repayment plan. It also seeks to replace the current, 10 year “Standard Repayment Plan” for the full amount of the loan balance with the “10-10” plan as the default repayment option for borrowers entering repayment.
The final component of the legislation promotes financial responsibility in higher education and incentivizes students to be mindful of educational costs and for colleges and universities to control tuition increases.
Monday, April 8, 2013
Support the Student Loan Fairness Act
The Student Loan Fairness Act, which was introduced on March 31, 2013 by House Representative Karen Bass (D-CA), was referred to the Education & Workforce Committee. Something must be done to address the skyrocketing student loan debt in this nation. This bill needs more support from organizations and individuals like you. Share this major news with your friends and colleagues!