Forgive Student Loans - Ideas for Change in America

What do you think is the most effective way to turn this idea into real policy? Add your suggestions here for how you think we should run an advocacy campaign to advance the idea – including the overall strategy, messaging, targets, and tactics.

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I agree with so much of what has been said here. My husband and I were married students and took out loans to pay for our educations. We believed that after graduation we would have no problem paying back our loans. We have had children and one of or children has a significant disabilty that requires total care. I stay at home to care for our son and family, but due to forbarrences and unexpected medical expenses our loans have increased to a point that they are past impossible to repay. We want to take care of our debt, but to pay what is "expected" would leave us with little of nothing to live on. (The five of us live in a 900 squ. ft. house and have one vehicle--we do not live beyond our means.)

If the collection fees, excessive interest and other fees wound be restricted to a reasonable amount then more people could repay without having to do without a home, car, food and clothing for them and thier children.

Suggested by Kathy Kitrel on 01/17/2009 @ 10:08AM PT
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I think that the fundamental problem with Student Loans is the fact that 18-20 year olds have a dream that they will be able to make the money to pay it back. My student loans are over 10 years old. I have had them on forebearance twice as I was not able to pay the minimum monthly payments. Professors in the colleges make it sound like after you have your degree you will have no problem in paying back student loans, however, they do not work in the real world. After acheiving two A.A. in Applied Sciences Degrees I am still make less the $40,000 per year and much of that goes to State and Federal Government, not to mention making my mortgage and utilities every month and putting food on the table for two growing boys. I would love to see this worked out so that I don't have that large payment every month.

Suggested by Nancy Beecher on 01/17/2009 @ 08:19AM PT
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I think the biggest problem is like others have said..."debt to income ratio." My credit score is ridiculously low even though almost every bad mark I had from my younger days (18-19 yrs old) have been removed and I have made a conscious effort to maintain decent credit. I can't even get an unsecured credit card because I owe almost $40,000 in student loans! I am a military war veteran and my fiance is a disabled military veteran and we can't even get a home loan under the VA right now because of the economy and our student loan debt to income ratio! I won't have a problem paying back the money I owe, I just wish it wasn't included in a debt/income ratio so we could get a home loan.

Suggested by Mistie Ferguson on 01/17/2009 @ 06:22AM PT
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Student loans are a burden on all who need them. Just from a personal perspective, my excessive student loan debt has prevented me from pursuing my own dreams and forced me into work that I regret. What good is a college education if it does not allow you to achieve that greatest of American dreams- the pursuit of happiness? My alma mater recently replaced all student loans with grants, assuring that future graduates will not have the same limitations on their pursuits. If one institution can do it, so can the others.

Suggested by Oliver Scott on 01/17/2009 @ 05:37AM PT
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I can't deny that forgiveness in full would be nice, but its not realistic and our government (and taxpayers) can only take on so much debt before there really is no way out. In order to give we the people a break, there must be a realistic plan in place where the money isn't absorbed, but repaid and in the process we the people can buy low interest homes and vehicles like everyone else who do not have the student loans figured into their debt-to-income ratios.

I agree with Sandy that it would be great if I didn't get denied a low-dollar home loan due to my debt-income ratio which counts my student loans against me. I also agree that low-interest pay back should be mandatory.

My interest is set at 4.15% and can be lower if I auto-pay. I have no issue with the bill, I understood what I was doing when I did it; however, the debt that allows me to easily afford a house payment of 550 a month keeps me from getting a reasonable loan due to my ratio. Sure, I could take out a loan at 16% but COME ON I have proof of paying land-deed contracts (bought and paid for) and rent for the past 16 years... never a bad mark and I can't have a lower interest home loan (I'd be happy with 8 or 9%) solely because of my debt to income ratio.

I truly believe that if student loans were not figured in when considering home loans many people who have been renting for years, but have steady incomes, will begin buying homes.

If folks are truly strained in their repayment, payments should be adjusted to their income AND figuring in essentials EVEN if that loan then takes 40 years to repay! (In today’s age income/debt capabilities should include a telephone and internet because anyone who works or has a student in the house need both. Of course, food, absolute incidentals (i.e.: toiletries or diapers), utilities, and any medical costs or special needs.) This payment could be reassessed every 2-3 years to adjust to current earnings and that would help it pay back more quickly as graduates typically increase earnings from year to year. (That would also help the attrition rate in university.)
Lastly, I agree with Peg that the interest rates should not be so high! Student loans are taken to move people forward, not pile on debt… is that right, because I don’t see it that way when the rate is 8.25%!
My key points:
-Keep the banks in check with lending (i.e.: ensure they do not over-lend). Regulations are great, but lenders must be held accountable. If they over-lend, they should be fined BIG. Regular spot inspections utilizing both a systemic and systematic approach will help to ensure lenders behave.
-Offer interest rates based on credit score, but keep the top end of the rate below 10.5% for home and 12.5% for automobile purchases and keep the fees in check
-Either fully do not hold student loans against graduates or utilize the proven rental payment history to figure what can truly be afforded TODAY, not based on what may be for those who hold loans... or perhaps a blend of both. (Forgiveness to graduates will be an incentive to help university attrition rates and adjustments of repayment rates would help everyone who has attempted to obtain an education.)

-Help those with debt who cannot afford to pay it develop realistic plans with low interest rates (less than 6.5%) and no extra fees.

Suggested by Dawn Allen on 01/17/2009 @ 04:25AM PT
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The Peoples Bailout: We the people will directly benefit from a personal stimulus package of a $6,000 per working adult for two years in a row. This would eliminate special interest, golden parachutes, lobbying and corporate greed.

Each of would be able to infuse capital into the system quickly and spread it widely. It would be a meaningful amount to pay off pressing bills, use as a deposit on a vehicle, house, or other major purchase. We are stimulating the wrong markets. Use the trickle up method.

Give Americans the dignity, we deserve. Stop the disguised "pork barrel" "earmark" give away.

Suggested by Richard Mullen on 01/17/2009 @ 04:23AM PT
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I hope this is something the new administration will consider. Even if it's just forgiving the interest on the student loans. I'm not sure if it's feasible to forgive all student loans, but that would be nice.

Suggested by David English on 01/17/2009 @ 04:07AM PT
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My daughter became mentally ill her junior year of school. In order to pay for her housing we took out Plus loans for about 15,000. That same year we bought a house and my income was based primarily on "freelance employment" But the disruption in our lives caused me to lose three years of work taking care of her while my husband struggled with his own depression brought on by the problems of my daughter's schizophrenia. She is still ill years later, and we have never regained our footing. Her loans cannot be forgiven unless she signs forms stating she will never be well. Even though we have found doctors willing to state this, she is not willing to do so (and honestly I don't blame her)
We hope that at the very least, people barely making minimum wage and others suffering mental or physical disabilities will be forgiven.

Everyone in this country should be allowed to go to school free for at least a BS degree, considering even the most basic jobs that ultimately only pay minimum wage or slightly above require a BS. Who can afford these high tuitions (even in state, living at home) when you're only making minimum wage?

I hope things will change for young people. Because my husband and I signed for these loans too, we cannot go back to school to better ourselves and improve our job choices and so the cycle continues.

Suggested by Evelyn Coleman on 01/16/2009 @ 11:47PM PT
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I know we should pay our debts. However, I think that student loans should not have a high interest rate. Eight percent interest is a lot. In my household, we have 4 students my three children and I. My two boys did not complete a degree and went to work after one or two years. I paid most of it for them, but now I can't. They have families to feed. My daughter will graduate this year, she is going to be a teacher. I think she will do better repaying her loan if the interest was lower.As for me, I had to go back to school to increase my salary before is my turn to retire. Having a lower interest rate would help me immensely. I am also a teacher. What do you think?

Suggested by Gladys Landing-Cor... on 01/16/2009 @ 05:52PM PT
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I agree with Peg Fisher. It seems to be an overlooked fact that Fannie Mae and Freddie Mac have had their hands in student loans - albeit under different loan company names, But, if they get a bail out, SO should those with high interest nooses around their necks. Most of us would be glad to attempt to pay the original note - with reasonable interest rates, just not the interest which was imposed unfairly and leaves us with no recourse in debtors prisons without walls. I also think that to have the entire loan forgiven, some would welcome teaching in an inner city school, etc. in order to have a clean slate. Many of us have been denied credit for homes and cars and so on. There needs to be some restitution there as well. So maybe, just calling the whole thing even would work.

Suggested by Sandy Jackson on 01/16/2009 @ 11:58AM PT
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