$1 trillion or not, Obama seeks to reduce student loan debt

WASHINGTON — In the midst of the heated national conversation on the country's budget and fiscal concerns, the debate is turning to student loans. USA Today recently reported that outstanding student debt in the United States totals over $1 trillion, surpassing the country's total credit card debt.

Reuters, in contrast, maintains that student debt hovers around $550 billion and credit card debt at $690 billion. The enormity of both estimates is alarming enough to bring the subject of loans and their implications to the forefront; and the Obama administration's response to the issue has induced a debate of its own.

The administration announced last week that it would accelerate a plan to reduce the burden of repaying student loans, according to Bloomberg News. The issue has produced widespread debate on the effectiveness and relevance of the initiative.

The White House will use its executive authority to implement changes in student loan procedures next year instead of 2014, as originally planned when the measures were approved in Congress. These changes include a "Pay As You Earn" Plan, which would reduce monthly loan payments from 15 percent to 10 percent of a borrower's discretionary income. Under the new plan, the balance would be forgiven after 20 years, instead of the current 25. About 1.6 million new borrowers could be eligible, according to the Associated Press.

Additionally, students or recent graduates with existing loans from both the Federal Family Education Loan Program and directly from the government will have the option to consolidate them and pay up to half a percentage point less in interest. The AP reports that this measure could affect nearly 6 million current or recent students.

The announcement came on the heels of a report from the non-profit group The College Board, which found that the cost of tuition for public universities in America shot up 8.3 percent in the last year, largely as a result of big cuts to state budgets like California's, whose public schools hiked up in-state tuition and other costs more than 20 percent during the same time period. Students who attend public schools are now leaving college approximately $22,000 in debt; graduates of private schools average $28,000 of debt each, according to the report.

The number of students who default on their loans also continues to rise. President Obama cited many of these statistics in a speech Wednesday to students at the Denver campus of the University of Colorado, reported the New York Times. He stated that while a university degree has "never been more important," it has also "never been more expensive."