News & Resources

Proposed law could affect student loan debt

May 01, 2012 Philip Burgess

Proposed law could affect student loan debt
Debt collection services may want to follow the progress of the most recent law concerning student debt, proposed in early March in Congress, as it could greatly affect their businesses in the future should the law pass.
 The National Ledger reported that the proposed Student Loan Forgiveness Act of 2012, introduced by Michigan Representative Hansen Clarke, could affect debt collectors working with student loan defaulters, as the text includes provisions forgiving debt for some graduates that have been paying loans off for 10 years. USNews notes that the bill provides a 10/10 Loan Repayment Plan which would cap payment amounts at 10 percent of the borrower's discretionary income, while forgiving unpaid debt after the customary 120 payments over 10 years, or 60 payments for individuals in public service. The law also guarantees a cap on federal loan interest, USNews said. In the law, the source noted, forgiveness after the allotted time is limited to $45,520, though forgiveness could be given instantly to borrowers that have already been paying for 10 years should the law pass through Congress. This could then effectively halt all attempts to recover debts instantly by collectors.