Graduation is fast approaching, and hosts of college students will soon be turning their tassels, tossing their caps, and setting out to look for jobs. According to the New York Times, the average student owes $25,250 at graduation. This is up 5 percent from the previous year. As tuitions increase, so do student debts, which increased the total debt in America. When the class of 2010 faced an unemployment rate for graduates of 9.1 percent, it became a major problem. Students who were unable to find jobs were not able to jump start their repayments on student loans, and are still suffering in the debt they incurred from their education.
The student loan debt of 2010 was higher in recent years, and the employment rate for graduate students was even higher. A financial aid assistant told the New York Times that the debts always go up but they never seem to go down. In most states, over half of the college graduates have debt to pay. In South Dakota, West Virginia, and Pennsylvania, over 70 percent of the students in the state have student loans to satisfy. On a national level, the amount of student debt now rests at $1 trillion, making it more expensive than credit card debt. People over 60 in America still have approximately $36 billion in student loans to pay off as a collective whole. Now, some politicians hope that a new law could reform the hopeless mountains of debt that college students struggle with.
On May 1st, Representative Hansen Clarke used Google video conferencing to show college students in Detroit his plan to relieve student debt. He explained how the Student Loan Forgiveness Act of 2012 would forgive student loan debt for anyone who has paid ten percent of their discretionary income towards their loans for 10 years. This would also cap interest on federal student loans- so that the rates cannot exceed 3.4 percent. The government would allow teachers and individuals with an occupation in public service or the medical field to have their debt forgiven after only five years.
Clarke believes that college students are treated unjustly. They are told to go to school and learn so that they can achieve their dreams, and then become bogged down by mountains of debt that they can't pay. Because it is difficult to get a high paying job in the current economy, many students have to settle for an income they can survive on, and tend to put off paying their loans because of the financial strain on their everyday life. One college student told the Huffington Post that her student loans have become a "nightmare" that has trapped him into feeling helpless and hopeless.
She is a teacher at an elementary school, and says that 30 percent of her income goes towards paying her student loans. She still owes almost $100,000 in payments, even after five years of payments, which she makes regularly each month, and never delays on. Like this teacher, many graduates are still struggling with their loans, and postponing their dreams until they are paid. This teacher says that she cannot afford to buy a home or get married, and doesn't think that she will be able to live life debt-free for at least 20 years.
According to Clarke, some people are still paying off debt from their social security checks, which is why he decided to propose this new bill. The Act has five other sponsors, and aims at helping current and future student borrowers with their finances. If the Act passes, then students may be able to have their debt forgiven up to $45,450 according to the Huffington Post. An online petition in favor of the measure already has over 500,000 signatures.