The American Institute of CPAs recently reported that nearly 39 million adults in the United States had student loan debt at the end of 2012. The number of loans outstanding has increased 70 percent since 2004, and each loan averages $24,803. As of the first quarter of 2013, the total amount of student debt outstanding was over $950 billion. Most people — particularly those bearing the burden — believe that there is some sort of student debt crisis in America. The cost of college is skyrocketing at a time when a college education is becoming more and more important. As of May 7, the ratio of job seekers to job openings is still 3.1 to 1.
What this creates is an environment in which it is very difficult for a college graduate to get a job. What’s more, most of those who do get jobs are getting lower-paying jobs that often can not support both their normal financial needs and their debt burden.
Fortunately, American policymakers and advocacy groups are hard at work looking for a solution. Some of their ideas are good, some are not — some have passed, some will not — but here’s a look at five of them:
1) The Smarter Solutions for Students Act
On May 23, the U.S. House of Representatives approved the Smarter Solutions for Students Act (H.R. 1911). The bill is designed to prevent interest rates of subsidized Stafford loans from doubling as scheduled on July 1. The bill and its proponents advocate a market-based interest rate for student loans, instead of a system that is devised by policymakers in Washington.
The bill will calculate both subsidized and unsubsidized loans using a formula based on the 10-year Treasury note plus 2.5 percent, with an 8.5 percent cap.
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