Student Loan Forgiveness Case

TitleStudent Loan Forgiveness Case
Publication TypeCase Study
Year of Publication2012
AuthorsFunke, RD, Boxall, SF, Funke, MB, Myers, GA, Potthast, A
Corporate AuthorsAssociation of Practical and Professional Ethics,
Date Published08/2012
PublisherAssociation for Practical and Professional Ethics
KeywordsAcademic Ethics , ECONOMICS , education , Personal Responsibility , Public Policy
AbstractAs higher education becomes an increasingly essential qualification for jobs and the price of higher education rises, many middle and lower class students have turned to low-interest student loans to finance higher education. Lately, however, student loan debt has soared to $1 trillion dollars and many recent graduates report having trouble finding a job in a slowly recovering economy. Faced with large amounts of student loan debt and no way to repay those debts, default rates are on the rise, with 8.8% of borrowers defaulting two years into repayment in 2009 . Many recent graduates believe they were not properly informed of the risks of taking out large loans to finance an education, especially with news that interest rates are set to rise to 6.8% in 2012 (absent action from Congress). Troubled economic patterns make up a perfect storm for a bill like the Student Loan Forgiveness Act of 2012, which was submitted to Congress earlier this year by Michigan Congressman Hansen Clarke. The bill is intended to lessen the crippling amount of debt that some students have incurred by pursuing higher education in a tough job market. The bill would go a long way towards lessening the burden on borrowers: capping interest rates at 3.4%, offering forgiveness of loans after 10 years of payments, and strengthening programs that trade loan forgiveness for public work.
NotesCase from the 2012 Regional Ethics Bowl Competition © Association for Practical and Professional Ethics
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