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U.S. Representative Hansen Clarke, D-Detroit, has come up with a new bill that would make paying back student loans more convenient: the Student Loan Forgiveness Act of 2012.
What the bill proposes is to forgive outstanding student loan debt if the borrower makes payments of ten percent of their income for ten years. It would amend the High Education Act of 1965, and borrowers would be given the option to choose the “10/10” loan repayment plan. The income in question has to be 150 percent above the poverty line, and graduates who enter any public service profession will have their loans forgiven in five years instead of ten.
The government is looking to make paying back student loans easier in the difficult job market graduates are facing today. Prices of education are steadily increasing and students and parents are continuing to take out more loans, with few jobs that provide enough to pay them off. Student loan debt has reached an amazing $870 billion, surpassing credit cards and auto loans.
The possibility for a student loan bubble is there, much like the housing bubble, which could have a serious effect on the economy. By forgiving student loans, it allows students to free up their money and invest on their own, creating new jobs in the country.