Two Proposed Student Loan Bills Could Help Law Grads, Won't Pass

Much respect to Senator Elizabeth Warren, the first-term Congresswoman who beat incumbent Republican Scott Brown for one of Massachusetts’ seats in the Senate. According to the Los Angeles Times, a big reason for her victory was her embrace of the Occupy Wall Street movement and criticism of big banks.

And with her first bill, she may have just won a few more votes.

The Bank on Students Loan Fairness Act, which has a snowball’s chance in hell of passing, would set student loan interest rates (for one year only) at the same rate that banks get when they borrow money from the federal government: 0.75 percent. The interest rate on federal student loans is currently set to double to 6.8 percent this summer.

She isn't the only legislator helping the kids, however. Another similarly-titled bill, the Student Loan Fairness Act, introduced by Rep. Karen Bass, has other brilliant ideas for student loan reform, including:

• A 10/10 Loan Repayment Formula (ten percent of adjusted gross income paid monthly, capped at 120 consecutive payments);
• Forgiveness is capped at $45,520;
• No tax penalty for loan forgiveness;
• All new Federal Direct Loans capped at 3.4 percent interest;
• Cutting public service loan forgiveness to five years (currently ten);
• Refinancing private education loans for certain borrowers;
• Anyone who makes less annually than their total private loan debt can have the feds "purchase" their private loan debt and roll it into a Federal Direct Consolidation Loan
• Interest-free deferment of Unsubsidized Direct Loans during periods of unemployment;
• Excluding other federal loan forgiveness programs (income-based, etc.) from taxable income.

A lot of these are intriguing for broke, unemployed and underemployed law grads. Rolling private loans into federal consolidation loans is brilliant -- especially since many banks have stopped offering private loan consolidation since the big bank bust of a few years back. Interest-free deferment during unemployment is also a pretty intriguing idea as well.

Though, according to Govtrack.us, the latter bill also has a zero percent chance of passing and a one percent chance of getting past committee, we wouldn't rush to label the two bills empty gestures. They may not accomplish anything directly, but they serve two important purposes: reminding students that they do actually have at least one advocate in our representative system of government and they put pressure on other lawmakers to address the $1,000,000,000 problem.

Related Resources:

• Petition: Support The Student Loan Fairness Act (SignOn.org)
• Tuition.io Lets You See How Sad Your Student Loan Situation Is (FindLaw's Greedy Associates)
• Three Not-So-Serious Ways to Defeat Student Loan Debt (FindLaw's Greedy Associates Blog)