Target: John King, Jr., Acting Secretary of the United States Department of Education
Goal: Cap student loan debt increase, and remove tax bills of forgiven debt in order to prevent students from going bankrupt for their education.
Income-based student loans were originally developed in order to assist graduates that had low income-to-debt ratios. Essentially, if graduates were unable to pay off student loan debt within 10 years, then the payment plan these students were granted takes into account income and forgives debt after 25 years of steady loan repayment. Unfortunately, the Internal Revenue Service considers this forgiveness to be income, and today’s graduates could potentially be facing massive tax bills in 25 years.
Consider Michael Hulshof, who graduated from law school in 2012 with $145,000 of student loans. Since then, even with steady payments, his debt has increased to $220,000. By 2037, when his loans will be forgiven, the sum will have ballooned to nearly triple his original debt, and Hulshof will owe a tax bill of $175,000 or more.
It is ridiculous that students are graduating from upper level educational institutes only to become slaves to debt repayment. If Hulshof faithfully pays his loan debt every month, in 25 years he should not owe a sum greater than the original price of his education. The Federal Student Aid should cap loan increases at 15 percent of the original loan in order to give graduates a chance to get out from under student loan debt. Furthermore, the tax bill on loan forgiveness must be dismissed in order to prevent even greater financial burdens on graduates.
By signing the petition below, you will demand that the secretary of the United States Department of Education reform student loan policies. Students should not be bound to a lifetime of debt in order to pursue higher education.
Dear Secretary King,
Graduates of higher level educational institutes are currently drowning in student loan debt that is increasing trifold throughout their lifetimes, even after regular, monthly payments. Students of this country should not be in permanent, lifelong debt in order to get university or postgrad education.
Furthermore, graduates on income based loan payments receive debt forgiveness after making faithful payments for 25 years, which is a positive; however, the IRS considers the debt forgiveness to be further income, leaving graduates with massive tax bills 25 years after graduation. These tax bills are often unjustly even greater than the cost of the original student loans.
I am urging you to reform student loan policies in order to cap loan increases, and remove tax bills on forgiven debt. Please take actions to enforce policies that enable graduates of higher education to pay off their debt.
[Your Name Here]
Photo Credit: NY Photographic