How does a student loan in the amount of just $7,500 turn into a debt too big to ever pay? The answer is loan interest and compounding. The Student Debt War Project (SDWP) wants to protect not only student debtors but also the entire higher education funding system so it has created a bill proposal that does both. Here is a quote from the SDWP bill proposal page:
The Student Protection Act (SPA) is a draft bill prepared by the Student Debt War Project (SDWP)… Here is a brief list of what the bill will do:
Makes all student loans 100% dischargeable in bankruptcy (without the need of an adversary proceeding), putting such loans on equal footing to other consumer loans and thereby eliminating many Rights infringements installed against student debtors.
Makes all student loan debts to have a maximum year pay-off and payment rate of 10-years in order to ensure that student debtors have plenty of remaining time to graduate, pay their student debts, then pursue the American Dream without the burden of lifetime student debt.
Allows any student debtor who took out their original student loans or consolidated student loans prior to the 1998 bankruptcy reform to re-open their bankruptcy and add their loan/s to the discharge order.
Allows adversary proceedings in bankruptcy under three conditions: 1) if the student debtor files for bankruptcy relief within 5-years post graduation, 2) if the judge determines there may be potential for fraud, 3) if the guarantor objects and files as the Plaintiff (student debtors are no longer the Plaintiffs in adversary proceedings because the assumption is that the debt is 100% dischargeable unless fraud or special circumstances can be shown that would otherwise omit the dischargeability of the debt).
All student debt would be subject to a maximum interest rate of 1/2%, with the actual amount charged to be set by the federal government each year. The purpose of a low interest rate is simply to cover program costs, not to provide massive profits to lenders and the government. The overriding purpose is to make it much easier for students to repay their debts rather than default on them through interests compounding schemes that elevate balances out of reach.
The idea is simple. Reduce payback costs so students can get out of college created debt faster and return to the economy and American Dream as consumers quickly. Also, reduce the student loan default rate by making loans and repayment affordable for struggling students.
Most students want to repay their student loans. However, they also expect their college education to help them earn the money needed for repayment. Let’s face it, things go wrong. Debts mount up and interests continues to pile up until the debt is so giant the student becomes a victim to the system. Default rates skyrocket and eventually the entire system collapses. That is no good for students or taxpayers. Something needs to change big time and the SDWP understands that.
We all need to remember the federal government prints all the money it needs out of thin air and has no costs (except printing costs). Therefore, if the government lends it’s “thin air” money to college students, it does not need (or deserve) interest on its “thin air” money. It needs to reduce higher education loan default rates and to preserve the student loan system. Therefore, why not give up the “student debt slave making interest and compounding scam” aspect of the student lending system to help solve the bigger problem?
Of course, the other big problem all of us students face are today’s ridiculously astronomical tuition rates. The SDWP has also solved that problem with the One-For-One-Rule bill proposal. It is probably one of the best ideas to come along in a very long time. The problem, it seems, is that the Congress and the White House oppose solutions and students so these great ideas have very little chance of coming to reality. That is why students need to start banning together and demanding these bill proposals be passed into law. We have to end the era of the $7,500 student loan turning into a balance owed of $32,000 and quit destroying the lives of students by making bankers and others wealthier off a system meant to help students, not profiteers.