Student Loan Forgiveness? Yes, and stimulate the economy.

http://blogs.moneycentral.msn.com/smartspending/archive/2009/08/28/should-feds-forgive-student-loan-debt.aspx

Should Student Loans be forgiven?


Should the federal government wipe the slate clean? What do you think? Should the federal government wipe the slate clean? Do students overburdened by the debt they took on deserve some kind of help? What are other solutions?


What are some possible solutions to help those who are overextended -- and to prevent it from happening? Here are some ideas that have been tossed around:

* Allow student loan debt to be discharged in bankruptcy court. (Another site, StudentLoanJustice.org, has made that part of its mission.)
* Provide more education to young borrowers. "Even if someone would have told me 10 years ago that my payments would be $880/month, at that point, could I have really
understood the consequences?" reader "Saddled_With_Debt" said at Consuming Interests.
* Increase grants to needy students.
* Provide more federal aid for those who face huge student loan debt to fill essential occupations, like family practitioners, internists and geriatricians in the medical
field.
* Encourage students to avoid private loans.
* Make student loan forgiveness even more available for those who take public service jobs. "I've heard of programs that forgive student loans to insure a supply of doctors
and teachers for rural areas. That makes economic sense as it is a bonus to attract new applicants, not a bailout," All Financial Matters reader Rick Francis wrote.

Graduates, meanwhile, can take advantage of another new program. In an article at MSN Money, Liz Pulliam Weston described how it works:

(Graduates) have the option to limit payments on federal loans to no more than 15% of their discretionary income or 15% of the amount of their income that exceeds 150% of the
federal poverty level. (For example, the 2009 poverty level for a single person is $10,830, so payments would be capped at 15% of his or her income over $16,245.) Unpaid interest
and principal are added to the loan, but any balance would be forgiven after 25 years of payments.

What do you think? Should the federal government wipe the slate clean? Do students overburdened by the debt they took on deserve some kind of help? What are other solutions?