Outstanding student loan debt in the U.S. is approaching one trillion dollars. One important question people struggling with student loan debt have is whether student loans are dischargeable in bankruptcy. With certainty, the options for student loan debtors are limited. For this reason, new programs and legislation are in the works to provide relief for student debtors and affordability for new students just entering college.
In 2010, President Obama signed the Health Care and Education Reconciliation Act (HCERA) to provide debt relief for college students. The HCERA gives student borrowers new alternatives for repaying their loans. There is an income-based repayment option to cap monthly repayments at 10 percent of income for borrowers. This option applies after 2014. Loans may be forgiven in their entirety after 20 years. The president’s new “Pay as You Earn Plan” will permit about 1.6 million students to select this feature right now.
Public service workers may benefit from residual debt forgiveness after a decade. The funding under HCERA will increase the amount of resources available for Pell Grants to $5,550 today. These historic changes will be preserved in the Budget Control Act of 2011. The HCERA includes a $2 billion allocation to help community colleges expand education and job training.
The community colleges and state colleges provide needed relief from the high cost of tuition at some private colleges. Increasingly, the high schools are offering college courses in the senior year. These offerings can reduce the college experience by as much as one year in accelerated programs. In addition, the Federal Work Study Program (FWS) is another option to help students pay for public or private college.
The Hill-Burton Act provides low-cost or no-cost medical and dental care for most middle class wage earners and their families. The health care is provided by a hospital or facility with a mortgage to be paid. The facility takes poor and middle class patients in exchange for an iterative reduction in or forgiveness of the mortgage debt the facility owes. This program can help college students with medical and dental costs if their family income is within the statutory sliding-scale income limits.
The Federal Work Study Program (FWS) provides funds for part-time employment to help students finance the costs of a college education. Students can receive FWS funds at participating colleges and universities. Hourly wages must meet the federal minimum wage requirements. Students may be employed by the college or university.
Shortly, the baby boomer generation will be retiring in record numbers. Every blue and white collar job category will be impacted. New trade school and college graduates will be needed to fill the void in order for the United States to remain competitive in the global market. The existing cadre of professional accountants, lawyers, physicians, dentists, actuaries, engineers and others will be replaced in growing numbers due to the retirement of the baby boomers. As a result of this trend, more affordable college education is an absolute imperative if this historic worker transition is to take place uneventfully.