Forgive Student Loans - Ideas for Change in America

While I would like to be responsible enough to pay back my student loans, I wasn't fortunate enough to find a job that paid enough to let me do so right out of college as well as to sustain a life above the poverty line. It took me 15 years to get to a point in my life where repayment is finally looking realistic. During that time, I spent a lot more time in school and my loans were deferred during that time, I have to say the interest alone is killing me.

A few of my suggestions, which may have already been posted are to make student loan repayment schedules last longer without interest after graduation and to actually even drop the interest rate to near zero. There has to be a way to make people accountable for paying them back, so I do believe there should be some kind of interest, but especially in a bad economy, where jobs are scarce, those of us who desperately wanted to go to school shouldn't have to feel the overwhelming feeling of drowning in student loan debt.

Also, while it's a great idea to have some kind of program to give back to the community and earn money for school in this regard, I think most of us feel that we can't possibly just abandon a job to pick up something similar to the domestic Peace Corps. It would be nice to expand the groups of careers that will pay a percentage of student loans back such as teachers in low poverty areas, certain medical fields, etc.

Suggested by Jennifer Fleishman on 04/29/2009 @ 09:31AM PT

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Community Service should (if possible) be related to degree. EXAMPLES: I have a BFA, so I would be willing (and able) to run or help with most art programs in my area; whether it is a day-care, nursing home, women & childrens shelter or prison rehabilitation program. If I had my degree in Biology I could volunteer with community gardens, or after school programs, or even community ed classes to teach interested citizens my trade @ little to no cost (facilities fees, etc). By approaching the community service aspect from this angle, we would also be able to utilize our knoweldge while helping others learn & grow. At the end of each "session", our hours could be validated either by a previously appointed person or commitee, or by each person in that session completing a form or evaluation.

Suggested by Danielle Bruce on 04/22/2009 @ 08:49AM PT

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Forgiving student loans is great, if we don't get to that point at least how about lowering all student loan interest rates both subsidized and unsubsidized to 0%. Why do we have to pay interest back to the government on tax dollars that were ours anyway?
Also I like the idea to allow community service hours to pay back loans but it A) has to be reasonable hours and B) the payback to your loans should be significant if you do a modest number of hours. Say for every month you do 8-10 hours of community service you get a full payment of your loans up to $800. So say $100 per hour up to 8 hours of community service per month......what would count though?

Suggested by Michael McCoulf on 04/21/2009 @ 09:56AM PT

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Sorry for some of the grammatical errors. I neglected to edit before submitting my response. However, I trust that you get the gist of my response.

Let's restore consumer protection for student loans. Allow all student loans to be discharged in bankruptcy if the individual qualifies for bankruptcy. Allow those who have already filed bankruptcy to amend their filing and include student loans.

That would allow people to get a true fresh start... which is what bankruptcy is supposed to provide.

Suggested by Jim moore on 03/30/2009 @ 11:20PM PT

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I have a message for those who insist that socialism does not work anywhere. Please do not seem to be so simpleminded. First of all I grew up one hour from Canada and to say that it does not work in Canada is simply ridiculous! How many Canadians do you see running to the United States? Are there things wrong with Canada, off course there are. However, are there things wrong with United States, of course there are. It is just a matter of living with different consequences.

I was born in Italy... and to say socialism does not work there is also ridiculous! Have you noticed that Fiat is about to take over a major share of Chrysler? Is it really perfect, of course not, they have problems. Is United States perfect, of course not, they have problems. Again, these systems produce different consequences. If all you do is look at the negative consequences of one system and say that it doesn't work and has never worked then you are being simpleminded. You are not looking at the negative consequences of our system and saying that it doesn't work. One could just as easily say that capitalism has never worked anywhere it has been tried. Keep in mind that United States avoided two major world wars being fought on their own territory.

I despise simpleminded people!

Now, in terms of forgetting all student loans... that would be nice. There is precedent in Christianity for doing so. The concept of the Jubilee. Jesus stated that if you than the money to someone in an effort to help that person, you should not charge interest.

However, I am not sure that is necessarily the best solution for all parties. What I like to see is the restoration of consumer protection for student loan borrowers. This includes the ability to file bankruptcy on student loans. Currently, as a result of the 2005 bankruptcy legislation is virtually impossible to file chapter 7 bankruptcy. Hence, it makes sense that if someone does qualify for Chapter 7 bankruptcy that that individual should be deemed to be suffering from severe financial hardship. That individual should be allowed a fresh start in life and be allowed to include all student loans. Forgiving debts is also deeply rooted in Christianity. I say this because often it seems that those who claim that came back that's easy right thing to do seem to also profess a deep allegiance to Christianity. It seems odd to me that many of these people have forgotten the concept of forgiving debts. Before I get accused of being anti-Christian, please know I am a devout Catholic. I just get annoyed when people claim that student loan debt should not be forgiven for any reason because that is the morally right thing to do. What moral code are these people looking at?

The idea of allowing people to include student loans in bankruptcy would provide relief. Yet, that relief would not be going to people who could obviously pay their loans. As a matter of fairness they should make the law retroactive so that anyone who has filed chapter 7 bankruptcy, since the time that student loans were forbiddento be included in bankruptcy can amend their filing to include student loans. This should be made simple to do. A simple one-page form for the amendment should be designed.

For those who do not qualify Chapter 7 bankruptcy, chapter 11Or chapter 13... those individuals can appeal for a modified payment plans, perhaps a reduction in the overall amount that is old, or a zero interest rate. The courts should decide in the same manner that the courts might decide what to do with General Motors.

Again, those who have qualified for chapter 7 bankruptcy should be allowed to amend and include student loans in their filing.

And one more time... let us stop being simpleminded by saying socialism has never worked anywhere it has been tried... you can say capitalism has never worked anywhere it has been tried. The gap between rich and poor continues to grow. People die in the United States because they have normal healthcare. The average American worker works longer hours than in the other major country. The average American worker has less time off than any other worker. The average American worker has less time to spend with family. There are lots of things wrong with American society as well. Does not point to only the negatives of the country that is predominately socialist and then conclude that it doesn't work.

Again, they both work is just that they produce different consequences. The best you can say is that you prefer to live with the consequences of capitalism over the consequences of socialism.

Suggested by Jim moore on 03/30/2009 @ 11:14PM PT

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At least cut our interest rates! Some of my loans have a rate as high as 8.25% We owe the money to the govt anyway, why not bail us out?? With less debt my husband and I can buy a home a car and put our hard earned money back into other industries. He had a JD and Im pursuing mine but its almost impossible to make it when coming out you have to make such high payments at such high interest rates. I'm an OBAMA supporter but TRULY HOPE that, although my needs are not as urgent as others, that the WHITE HOUSE is listening to our plea.
THERE needs to be student loan relief soon!

Suggested by karleana lahens-abner on 03/23/2009 @ 01:07PM PT

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I left college in 1996 due to a mental breakdown. As an adult student whose only funding was financial aid, I had racked up a bit of debt by that time.

The Department of Education refused to give me a deferment, claiming that my psychiatrist did not fill out the paperwork correctly. They informed me of this after the deadline to file that paperwork was long past. And the Department of Education has no appeal process.

The other day, I was contacted by a collections agency. They told me that due to the debt owed to the federal government, my unemployment compensation will be garnished soon. I have to apply for jobs that do not pay anything near my last job, and I'm getting no responses.

I have not had a tax refund since 1996. I received no economic stimulus checks.

Here are my suggestions:

1. End the "debt in perpetuity". Allow for filing of bankruptcy on student loans owed. Allow for the debt to be removed from credit reports after 7 years, as are other debts.

2. Get rid of the "evil stepmother" of the Department of Education. Department of Education staff are often rude, obnoxious, condescending, and insulting. Get rid of those people, and staff it with people who understand people and can work with students and educators to reach appropriate solutions.

3. Enact a credit towards loan repayment based on community service by students. Students are often more than willing to spend a few hours a week doing charity work, reward them for it.

4. Evaluate deferment requests by qualified individuals. Medical deferments should be reviewed by doctors, not administrators, on medical grounds. Deferments based on service in at-risk communities should be reviewed by someone knowledgeable in the area, not a desk-bound harridan having a bad day.

5. Grant deferments to active duty service members, and credits for their time served against the principle of the loan.

Seriously, we don't need the eternal punishment of the Department of Education for having the audacity to go to college.

Suggested by Mitchel McAllister on 03/21/2009 @ 12:01PM PT

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Restore the usual and customary consumer protections for student loan debt. Debt is debt, and when a person is destitude it is morally wrong to harrass them for the rest of their natural lives and hound them for money they can never repay. People who truly need it should be absolved of the oppressive burden that will never allow them to become a productive prosperous member of society and stimulate and grow the economy. I also like the idea of public service to pay the loans back because that is a win-win for the borrower and society.

Suggested by Eric Hatch on 03/18/2009 @ 02:19PM PT

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Yes, loan forgiveness and bailout funds come from the taxpayers pocket.

But, taxes are not neccesarily bad. In countries like Sweden, they pay an astronomical amount of taxes, but instead of viewing it in a negative way, they understand that their tax $'s directly contribute to the well-being of their country. I honestly would not care if I was taxed 40% taxes on my income if every other individual (rich or poor) was taxed at the same flat %.

In a community where my education is paid for, my childrens education is paid for, my medical & my loved ones medical is paid for, where child and senior care are paid for, where parks and community space are a priority, where everything is able to run efficiently preceisely due to the fact that everyone is contributing the exact same amount of effort, then every single person in the community knows that they are contributing to the positive evolution of their country.

No individual person/ family should have to daily worry about a multitude of bills they can not possibly afford, and likely will never be able to afford (after interest).
I believe this statement whether we are speaking about indentity fraud victims, homeowners from the housing scam, outrageous medical bills, or receivers of student loans.

Now, it is certainly the individuals responsibility to in some way work off or pay the money/ services they received in order to incur the debt in the first place. This is where is gets tricky.

I agree that I incurred my student loans, and that although I have grown and learned much since then, it is still a decision that I made and acted upon. I pay my loans in good faith, even though my minimum monthly payments put me behind on the rent and don't even touch my loans principal balance.

It is unacceptable that anyone pay thousands of dollars to a loan company, only to see their loan increase from $125,000.00 to $275,000.00 within 5 years! This type of thing is happening constantly, to people at all levels, and when everyone is being pushed and pulled, the natural enemy is whatever adds "more" to their plate and here personal greed and vanity become contributers to the problem.

When you are forced by nessecity to live meagerly, unhealthily, check to check, it is a huge emotional slap in the face when your government acknowledges the problem, and offers all the solutions and resources to the companies that knowingly put you in your current situation.

When you are in a lower tax bracket, you feel resentment towards those in a higher one, because they intentionally try to talk/trick more $ off of you, and then legally take more of it.

When you are in a higher tax bracket, you feel disdain and dominance towards those in a lower one, because it is your tax money helping pave the streets they might have to sleep on soon.

The truth of the matter is; with the same flat % for taxes, each person would be contributing the same amount of their livlihood, which would in turn make each person equally able to reap any of the benefits or programs available due to increased resources. If we were able to live in a community where all contributed equally & all were able to benefit equally, then grumbling about "my" high taxes, or "his/her fancy car" suddenly becomes very petty, and not as noble as we seem to make it out.

I don't want a country full of lawyers, plastic surgeons and PR reps: I want a country where people choose what to study, what to love, based on how it makes them feel, not on the projected marketplace!

My ideal suggestion? (I know some people already hate it):
1. Interest rates moved to a lower percent, and frozen or eliminated altogether. (This includes wiping away exisiting interest that has accumulated).
2. Increase every Americans taxes to a single flat %
3. Create & implement a comprehensive plan to enact the free education, childcare, healthcare, etc plans. (Engage people with massive amounts of debt in this; many will have valuable training already that they have not been able to utilize in their deadend jobs. This "volunteer" work could even be assigned a flat % to be applied to the remaining balance of said loans, thus helping reshape the economy, restructure our communities, and help all Americans really see & believe that everyone has something valuable to contribute, and just because it doesn't happen to be more $ for you does not mean that person is worth less than you, vice versa.

Suggested by Danielle Bruce on 03/18/2009 @ 08:31AM PT

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Clearly, student loans worked well for those lucky enough to graduate during a booming economy, or who had limited aspirations (just a BA at the local state school). Some of the victims are those of us in lower middle class society, with nothing to fall back on in hard times, who where smart enough to do well on entrance exams and got into really highly rated expensive schools. All the schools recruiting brochures bragged about how well their graduates did after graduation, big salaries, important positions, thus the burden that seemed to be represented by the student loan looked small. It looked very doable, even if you did not get the best jobs, the second and third best would make the loan payments work. Then despite doing well in school, the economy is in a shambles, there are no significant opportunities for these over educated individuals, then some tragic happens in their lives, and the predatory loan services push them as quickly as possible into default for they can collect the guarantee then sell the paper to even more predatory collectors. With the current economy there is no doubt you are creating a whole new army of these "indentured servants" stuck with non-discharge-ible massive loans that are three, four and five times what there were at graduation. Impossible to get out form under and preventing the people from advancing their lives, in some cases, making it economically wise for them to keep their salaries low enough that no one attempts to collect from them, because if they have too high of a salary, take on too much responsibility a loan servicer will come in and push them back to as close to poverty as they were anyway. It was all a trap, and a trap that has perpetuated a huge build up in higher education. Consumer rights, such as full bankruptcy protection needs to be re-established, otherwise the loan papers always have some "value" in the financial markets and the loan companies will never do the right thing and discharge really noncollectable, and unserviceable debt.

All I can say is that people need to write their story, and tell their congressman and senators, they are the only ones with the power to effectuate change on this issue.

Bring bankruptcy protections back, give consumers a stick to use in their battle to obtain fair and reasoned treatment from lenders. Without the potential of lossing the note entirely, the lender has absolutely no incentive to discuss terms.

Suggested by Will Elkner on 03/18/2009 @ 07:30AM PT