A college degree was once the path to the American Dream. Students were once able to pay their way through college by working part-time. That is no longer feasible as tuition prices have increased by over 800% since 1980. These days, a college degree looks something more like a nightmare as graduates enter the declining workforce saddled with tens of thousands of dollars in student loan debt. Borrowers often face usurious fees that cause their loan balance to balloon to 2-4 times the original amount they borrowed. Millions will be burdened with this debt for the rest of their lives, unable to purchase homes, vehicles, have children, start businesses, and even save for retirement. These are the very things we need people to do in order to pull our economy out of this recession. This bill proposes a 10 year repayment plan at 10% of a borrower's discretionary income and after 120 payments, the remaining balance is forgiven, and not considered taxable income.
I borrowed about $79,000 and have paid on-time since I began repayment in 2009. I currently owe $95,000 and Sallie Mae estimates I will pay over 435% of what I originally borrowed by the time I pay off my loans in 22 more years (so long as I can continue to make the regular payments). At that time, I will probably end up owing the IRS a significant amount of money (that I probably won't be able to afford in one large lump sum) if my federal loans are forgiven under the Income Based Repayment plan.
Countries like New Zealand and the United Kingdom have similar and successful repayment plans. It is time we start implementing a repayment option that does not leave our graduates indebted until death or facing the offset of their social security benefits in old age.
Rep. Bobby Scott, please co-sponsor H.R.4170, The Student Loan Forgiveness Act of 2012.