Rep. Hansen Clarke introduced The Student Loan Forgiveness Act of 2012 (H.R. 4170) on Thursday, March 8. This bill would forgive outstanding student loan debt for Americans who have made payments equal to 10 percent of their discretionary income for 10 years.
"This provides student loan borrowers with a second chance, those who have been struggling financially," Clarke told his colleagues on the floor of the House. "And by cutting this debt, this frees up their money to invest on their own. That will create new jobs throughout this country. It's time for Congress to stand up for the rights of student loan borrowers. It's time to forgive these student loan debts."
This bill would amend the Higher Education Act of 1965 by giving borrowers the option to enter the 10/10 loan repayment plan. Borrower's discretionary income will be defined as any annual income exceeding 150 percent of the poverty line for an individual or family. This bill would also allow graduates who enter public service professions, such as teachers and first responders, to have their loans forgiven in five years instead of ten as well as cap interest rates on federal loans at 3.4 percent.