Obama Signs Student Loan Forgiveness! Repayment Capped at 10%, Forgiveness of Debt, Ends Subsidies Given to Banks Who Handle Student Loans

Obama Signs Student Loan Forgiveness - March 2010 - Image via instantsource.net


On Wednesday, the President will announce new measures to change the Student Loan Program – again. In March of 2010, President Obama signed an “Overhaul of Student Loan Program” according to the New York Times. The article notes that the Student Loan “Initiative” was signed into Law by the President the same week as the Health Care Reform Act – and went somewhat unnoticed – most likely by those who are now “occupying” Wall Street.

The Gist:

1. The law takes fees paid to private banks to administer loans and transfers those monies into the Pell Grant program – increasing grants to a maximum of $5,975 over the current $4440 by the year 2017.
2. Invests in Community Colleges
3. Caps Interest repayment at 10% of income in 2014
Forgiveness of Debt after 20 years with consistent payments and/or forgiveness after 10 years for public service (includes teachers, nurses and military service).

The president touted this reform in his weekly address on March 27th, 2010:

“WASHINGTON – In this week’s address, President Barack Obama praised the bold reforms to the higher education system passed by Congress this week. These reforms save the taxpayers $68 billion over the next decade by ending the subsidies given to banks and middlemen who handle student loans. The money saved will help expand and strengthen the federal Pell Grant program. The reforms will also cap college graduates’ annual student loan repayments at 10% of their income, revitalize community colleges, and increase support for Minority Serving Institutions. “ (Read More:)

(Address to Nation on Student Loan Act Below)

The entire text of the “Jobs Act” signed into Law along with Health Care Reform in March of 2010 is available here: http://www.whitehouse.gov/jobsact/read-the-bill.

Therefore, if one is Occupying Wall Street and complaining that President Obama needs to do something about Student Loan Forgiveness, one should be aware that the man already did. If you have a problem with the debt you have or are accumulating, consider public service, volunteer for the military, teach or become a nurse to fast track your forgiveness. If public service does not appeal, then a twenty year plan is one the table. If you are furious with the Banks for jacking up the Price of your student loans – You’re furious with the wrong institution – the banks no longer receive those fees.

Obviously, the President, for all his good intent, failed to get the message that he had already passed this “Bold” to the unwashed masses that are “Occupy Wall street” (or any particular city, town or hamlet in the event it is not convenient for the group to travel to New York City.)

Therefore, since the President has already done his best, and you complained, loudly, with the help of the unions – the President is once again, going to announce a new initiative in Denver on Wednesday, October 26th to help you out of your Student Loan crisis. Of course, details are forthcoming, however, one can well imagine that should you stick it out – sometime within the next three to four decades – your demands will be met – and the taxpayer will be on the hook for all of it.

The only forgiveness of student loan debt that should be on the table would be the right to add student loan debt into a bankruptcy filing. In the case of debt restructuring, under the current bankruptcy laws, student loans are exempt, meaning they cannot be included in those debts that are dismissed. This should be changed, specifically in cases of extreme hardship, where one can document having achieved a degree, found gainful employment in his/her chosen field, has lost that gainful employment and is sitting on unemployment trying to find a job that even comes close to paying ones debts.

Of course, this could be solved by increasing the number of private sector jobs available in the nation, and that would begin by cutting the corporate tax rate and inviting corporations back into the U.S. In addition, a national Right to Work law, which allows employees to opt out of unions, would put a) more money in the employee’s pockets to pay the student loan debt in the first place, and b) invite even more corporations into the country bringing in additional jobs to fill.

Therefore, don’t blame Obama for not meeting your demands, he already has, in 2010, however, you may be able to blame him for not taking the Bold Steps necessary to stimulate the private sector mentioned in the preceding paragraph.

Remember: The government does not create wealth, or have any products or services that it sells to make money – the only way the government gets money is through – taxes. The fewer individual workers the government has to tax, the less income that the government has to spend (or it must borrow more), when the Federal Government “creates” Federal, or State or Local Government jobs, those jobs are funded by the Taxpayer, who is the only source of Income the Federal Government has. This does not stimulate the economy, only private sector jobs will stimulate the economy.

The Video of President Obama: The Student Loan Reform Movie Released - March 2010