Total outstanding student loan debt officially surpassed total credit card debt in the United States in 2010, and is on track to exceed $1,000,000,000,000 during 2012;
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;
Because of soaring tuition costs, students often have no choice but to amass significant debt to obtain an education that is widely considered a prerequisite for earning a living wage.”
If you want to hear more from Rep. Clarke, you can watch him introduce the bill in the House. But right now we’re going to do what the Student Loan Ranger does best: explore the details.
The act 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. That’s a lot! Here’s more information on four key parts:
1. 10/10 Loan Repayment Plan: Cleverly called 10/10, the plan caps payment amounts at 10 percent of a borrower’s discretionary income (the same 10 percent cap as President Obama’s Pay As You Earn proposal in terms of payments) and can provide forgiveness in 10 years.
The forgiveness provision kicks in after a borrower makes 120 payments, which must be either payments under the 10/10 plan; payments that were not less than they would have been under the 10/10 plan; or “payments” of $0 during a month the borrower was in deferment due to an economic hardship.
