Howard University graduates (Alex Wong/Getty Images)


Background: American student-loan debt now stands at nearly $1 trillion, surpassing America's total credit card debt. Even more troubling, 2012 represents the first year in which the number of student-loan borrowers more than 90 days behind on payments has surpassed those comparably behind on credit card payments. Reports (pdf) have found that students of color are graduating with more student debt than their white counterparts. During the 2008 campaign President Obama said, "I went to college having to take out student loans, went to law school having to take out student loans. Michelle took out student loans. When we got married, I think together our total loan payments every month was more than our mortgage when we bought a house, and that lasted for about 10 years."

He added, "As I said, what we are looking at potentially is being able to consolidate some of the loans, and if they are part of a broader pool, we may be able to lower interest rates on the debt that they already owe. But the key is going to be going forward, making sure that young people in the future are able to afford to go to college."

First-term accomplishments: Making college financing more economical for American college students has been a priority of the president's first term. In 2011 he invested political capital in traveling the country and college campuses to rally support for preventing Congress from allowing student-loan interest rates to double from 3.4 percent to 6.8 percent. The effort was a success. The interest rates did not double. The administration also increased the maximum amount of the Pell Grant, a primary source of financial aid. Additionally, the administration made the government a direct loan lender, thereby eliminating the role of many banks, a move perceived to be more efficient as well as less financially cumbersome for students and families.

But perhaps the president's most significant accomplishment related to student loans is that he fast-tracked changes to the income-based repayment system, or IBR. The changes mean that instead of paying a minimum 15 percent of their income for student-loan payments, borrowers instead pay only 10 percent, and after 20 years of responsible payment, the remainder of the loan is forgiven. 

Second-term hopes: Some of the president's most ambitious rhetoric during the 2012 State of the Union focused on student loans. He said, "Let me put colleges and universities on notice: If you can't stop tuition from going up, the funding you get from taxpayers will go down. Higher education can't be a luxury -- it is an economic imperative that every family in America should be able to afford." He also laid out specific policy goals tied to ensuring that more Americans can successfully pursue higher education: extending the tuition tax credit and increasing the number of work-study jobs over the next five years. The recent fiscal-cliff negotiations ensure that the tuition tax credit will be extended at least through 2018.

But perhaps even more important than continuing to pursue efforts to increase work-study jobs will be administration oversight and enforcement of measures intended to prevent colleges from presenting misleading information to prospective students and their families. Under the president's direction, the Consumer Protection Bureau and Department of Education have pressed colleges to use one universal form to allow for comparison of financial-aid packages and to be transparent about the risks of debt.

The real question for a second term is how aggressive the administration is prepared to be about compliance. Many indebted students have complained that if they had known that their college's 99 percent graduate-employment statistics used in promotional materials included students working as waitresses or bartenders or in other jobs that don't require degrees, they might have reconsidered going into debt to pursue a degree at that particular institution.

Obama put colleges "on notice" in his State of the Union address. His second term will help show how many of them respond accordingly. 

Tell us what you would like to see President Obama do about student loans during his second term, using the comment box below.


Like The Root on Facebook. Follow us on Twitter.