Sunday, April 22, 2012

Student Loan Forgiveness Act

H.R. 4170, sponsored by Democratic Representative Hansen Clarke, is worth looking into if you have student loans or have friends or family who have them.

H.R. 4170, or the Student Loan Forgiveness Act, is not an giant "we forgive your debts" piece of legislation, but rather a plan to make paying back student loans affordable, meaningful and manageable. Those of us who have debt know the feeling of never being finished with it, as if it will just keep going for our whole lives. We also know the desire to continue in higher education to expand our knowledge bases and career goals that is coupled with the terror and realization that we are adding tens of thousands of more dollars onto an already gigantic negative balance.

I am going through this right now and have, in fact, decided not to go back to school because I simply cannot afford adding $40,000 to my already existing debts. I do not think that $40,000 is a good gamble in the economy: an economy where that Masters degree will probably give me a $1000 - $3000 bump in annual salary. This means that I will have to teach or administrate for at least 13 additional years to makeup the cost. (In some states, Masters degrees will earn you more of a bump in salary....but those states or cities are typically much more expensive for cost of living, so you have to balance that out, too. There is a huge question in my mind right now about what exactly we are all doing....there is so much money flying in and out of bank accounts, and I wonder what it is for? Why live in a bigger city where you will be paid more if it also means you have to pay more just to survive?)

U.S. News and World Report goes into a great amount of explanation over the details, and you can also find a pdf version that explains how it would work here. Basically, if you accrue student debt, under the act, you would pay 10% of your discretionary income for ten years, and then any remaining debts would be forgiven. Now, being that discretionary income is income that is post-tax and post-expenses, this would mean much less than most of us are paying now.

Let me use myself as an example. As a teacher with almost ten years of experience (wait for it), I earn $2500/ month after taxes. (No, you didn't read this wrong. See my earlier post about the Teacher Salary Project and maybe you can sign up over there, too).  You may think this is tacky, but I am making a point here....

So....$2500  - all my bills (rent, cell phone, car payment, insurance, health care, gym membership, utilities, and credit cards) = $1015.00 more or less per month for gas, food, and student loans. I even qualified for Teacher Loan Forgiveness, so I am in a better spot than most.  I am thinking this bill's emphasis on discretionary spending does not include food, gas and entertainment.

Under this bill, my payment would be $101.00 per month. Currently, my student loan payments are $235.00. This bill would help me leaps and bounds, and no doubt, would help you, too.

The goals of this act are not to give forgiveness, but to alleviate some of the debt that is crippling people in my generation and the generations after. We all have to live with debts, and we all have to deal with the consequences of decisions we have made. But for those of us who are teachers, librarians, social workers, policemen, firemen, public defenders, adjunct professors, or other social service professionals, this is a plan that will make people feel like what they are doing is appreciated by our country, and that the American Dream is still available for us. Right now, it seems like the vision of the American Dream is becoming shrunken so small, it is hard to imagine how it can be accomplished when one has so little money to save despite experience and education. 

Going to this link will allow you to contact your Congressional Representative and tell her/him that you, too, support this act. 

1 comment:

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