Roseville, CA – After his fund-raising campaign sweeping through California, President Barack Obama made an appearance at the University of Nevada in Las Vegas. The appearance looked more like a pep rally/campaign stop with 2,500 supporters composed of young people.
In his speech, President Obama criticized Republicans for being too slow in tackling the issue of student loans. Up to this day H.R.4170: Student Loan Forgiveness Act of 2012 that deals with student loan interest caps for federal loans, debt forgiveness, refinancing chances for private borrowers, etc. is still pending in Congress.
In 2011, President Obama proposed measures to ease the burden of student loans. The key elements of his proposal were: consolidating loans, consumer protection and income-based repayment.
President Obama reiterated his administration’s commitment in speeding up the change in the statute of a 2009 law to enable student loan debtors to be updated on their federal Stafford loans. A proposed 10 percent cap on the disposable income of Stafford federal loan debtors will be imposed instead of 15 percent as long as the debtor is updated on their repayments. This change in the law is supposed to be effective by 2014 but Obama’s administration is gunning that this statute be imposed on new loans obtained after 2012.
The problem with the proposed student loan program is that the Obama administration and Congress are unable to agree upon a decision on where to get the funds to cover the $6 billion cost of imposing lower rates on student loans.
Meanwhile, the Democrats are proposing alternatives to subsidize the impact of lowering down the interest rate by shutting down loopholes that are exploited by the wealthy. Examples of such loopholes are Medicare and Social Security taxes, the wealthy declare these as dividends and not as cash income therefore enabling them to pay such taxes. The rich always seems to get away with paying taxes while the regular Joe is unable to avoid Uncle Sam and gets penalized for doing so. Statistics show that because of loopholes, 7000 millionaires did not pay income taxes in 2011. Remembering a quote from Leona Helmsley, “Only poor people pay taxes.” The Republicans on the other hand are initially suggested that the fund for preventive health services be removed from President Obama’s insurance law.
The government should come up with a solution soon because the 3.4 percent interest rate that was imposed on Stafford federal loans 5 years ago will due to the ailing economy will be reverted to the original interest rate of 6.8 percent.
Almost everyone who is in debt is paying off a student loan. The amount of student loan debt has exceeded $1 trillion surpassing mortgage and credit card debts. Unlike the other two types of debt owed, student loans are almost impossible to discharge in bankruptcy. The only way to discharge it is to prove undue hardship but with the strict rules and requirements to prove undue hardship most petitions regarding the discharge of student loans is thrown away in court.
The cost of obtaining a college education is so high that the burden is sending college graduates straight to the poor house before they can even have a chance to jumpstart their lives. With the high interest rates and unscrupulous loan companies taking advantage of students, by the time a person is able to pay off his/her student loan, they are already in their semi-retirement age. The government needs to do something about this, STAT! Maybe the tea party in Roseville can have this on their agenda in their next meeting.