#1 Public Education Should Be Free for the Most Needy Students
To accomplish that, I propose that the maximum Pell Grant award should be based on the highest in-state tuition rate at a public university, excluding Washington D.C. For students attending schools in the District, the maximum Pell Grant award should be based on the highest in-state tuition rate at a public university in the contiguous states.
#2 The Accrued Interest on Federal Student Loans Should be Waived
Federal student loans accumulate interest daily. On top of that, several capitalizing events cause student loan balances to skyrocket. The accrued interest on student loans should be waived. The interest rate for federal student loans should be set at a fixed interest rate of 1.5%.
#3 The Various Income-Driven Repayment Plans Should be Eliminated
The income-driven repayment plan system is confusing. The various plans should be eliminated for all loans made after a future date and replaced with one income-based plan.
That plan should cap monthly payments at 10% of your discretionary income for your family size.
Discretionary income will be defined the same as it is under the REPAYE plan.
Income for married borrowers will be determined on whether they file taxes jointly or separately.
#4 Parent Plus Loans Should be Eligible for the New IDR Plan
No more needs to be said about this one.
#5 Student Loan Borrowers with Joint Consolidation Loans Should be Allowed to Deconsolidate
There remains a small, but a significant portion of student loan borrowers with joint consolidation loans. Many of those borrowers have seen their marriages dissolve, but their joint consolidation loan remains. Borrowers with joint consolidation loans should be allowed to deconsolidate their loans. This way, their financial fate is no longer tied to their ex.
#6 Offset of Child-Tax Credit for Defaulted Student Loans Should Stop
Child-tax credits protect the most needy among us. It’s unacceptable to offset the child-tax credit portion of a student loan borrower’s refund to pay their defaulted student loan.
Tax refund offsets should continue, but only the non-child tax credit portion should be eligible for offset.
#7 Students Who Were Defrauded by Schools Should Have Their Federal Student Loans Automatically Discharged
A student should not be saddled by federal student loan debt for a school that has found to have defrauded its students. In those instances, the federal government should automatically discharge the federal student loan debt borrowed on or after the first instance of fraud by the school was established.
#8 Private Student Loans Should be Dischargeable in Bankruptcy
Private lenders should no longer be afforded the same protection extended to federal student loans. Student loans made outside of the federal student aid program should be immediately dischargeable without the need to prove undue hardship.
#9 Federal Student Loans Should be Dischargeable in Bankruptcy After 7 Years
It’s important that we dissuade student loan borrowers from filing bankruptcy immediately after funding their education on the financial backs of taxpayers. Federal student loans should be dischargeable with a showing of undue hardship after 84 months of payment have come to pass. Periods where the loan was in deferment or forbearance toll the waiting period, but do not reset that period.
#10 Undue Hardship Should be Defined
Bankruptcy case law for student loan undue hardship cases is messy. The case law is all over the place. Congress should be charged with defining undue hardship based on a financial algorithm based on the poverty guidelines.