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Government Student Loan Rehabilitation
Wouldn't it be awesome if the government bailed out Americans' student loan debts?
New York Attorney, Robert Applebaum believes that the federal government should cancel ALL outstanding student loan debt. Yes, for everyone! Why if banks and automakers are benefiting from government bailouts, why shouldn’t debtors such as this group reap some benefits as well?
According to Applebaum, canceling all federal student loan debt would produce far more effect and stimulus on the economy. Student loan borrowers are paying on an average from $200-$1000 a month on student loan repayments. This could have a dramatic effect on the economy if we were able take that money and spend it elsewhere.
Currently, it is estimated that Americans owe approximately $400 BILLION dollars to the government in student loan debt. Also, once a debtor goes into default on their student loan debt, this changes their credit score and ability to obtain good credit (if any credit). This also is affecting a consumer’s ability to obtain good employment, good interest rates, mortgages, etc. Thus keeping everyone in the same vicious cycle circle.
Basically, governmental student loan debts haunt most people for 10-20 years and can be a payment bigger than a mortgage. If the government wiped away or “bailed-out” the average American, this could potentially be the most powerful agent of financial stimulus in today’s economy.
Back in January, Applebaum created a Facebook group that has now reached 156,000 people. With their support, he has orchestrated a petition campaign that he intends to bring to Congress. More than 40,000 have already signed the document. The goal is to present a plan to cancel all school loans in the United States.
For its part, the federal government has already been focusing the problems with student loan debt and the costs of higher education. In fact one of the government’s solutions to some of the costs of higher education will be addressed in July when a new income-based repayment plan is put into action.
This program will prove a cap on payments that is determined by the borrower’s income. The cap may average at 10%. Additionally, the government plan states that once a graduate has paid for 25 years, the remainder of the balance will be forgiven. But is this enough?
