This week President Obama did a swing through some college campuses talking about student loan debt . The immediate issue is the 3.4 % interest rate on federal student loans . It 's set to double July 1 unless Congress acts . Keeping the rate low in this still weak economy is , as the president said , a no-brainer . Even his opponent Mitt Romney has endorsed it . But the larger problem -- mounting college costs and a cumulative $ 1 trillion in student loan debt — remains untouched . Some recent polls have shown that support for Obama among young voters , once Obama 's enthusiastic fans , may be waning in this election compared with four years ago . Student loans are seen by some as the president 's chosen key to regaining their hearts . But really , the issue has been raised for him by the Occupy movement , gearing up this May 1 with a new set of actions focusing on the cost of college and the depredations of the student loan industry . Additionally , almost 700,000 people have signed a petition sponsored by MoveOn.org for student loan forgiveness , started by lawyer and student-loan debtor Robert Applebaum . And the Student Loan Forgiveness Act of 2012 , introduced by U.S. Rep. Hansen Clarke , D-Michigan , last month , is aimed at offering relief . What 's at stake here is the basic equation of the American dream : Hard work plus merit equals opportunity . As usually happens , hard times have led to cuts in support to public education and attendant tuition hikes . Young people are graduating into a dismal job market with an average of more than $ 25,000 in debt . Loan default rates were up sharply last year , and many graduates are questioning the value of their education . In eight years of covering and advocating for student debtors , I 've never seen such a level of public outcry . The president and his Department of Education deserve credit for keeping the heat on student loan and college cost issues , and not just at campaign time . Their most important move was probably the government takeover of the student loan market . As of July 1 , 2010 , all federally subsidized student loans — about 80 % of the total — have been originated by the Department of Education . The deal ended billions of dollars in unnecessary subsidies to lenders like Sallie Mae and , in theory at least , empowered the government to set repayment terms friendlier to student lenders . Unfortunately , the measures proposed so far -- freezing interest rates , income-based repayment and public service loan forgiveness -- have n't gone far enough to improve the lot of students and recent grads . There are indications that the specialized repayment programs , designed to make loans cheaper for low earners and those employed by the government or nonprofits , are undersubscribed because of red tape and a lack of publicity . There is a simpler way to cut the Gordian knot of rising debt and college costs , one that would help desperate graduates in the short term and lower the cost of college in the long term . The answer is bankruptcy relief for both federal and private student loans . Since 1998 , federally subsidized student loans have been non-dischargeable in bankruptcy , except in rare cases involving permanent disability or death . Since 2005 , even private , unsubsidized student loans -- the fastest-growing , highest-cost type of student loan , tantamount to putting college on your credit card -- have been immune to bankruptcy claims , as well . Without bankruptcy , lenders have little interest in negotiating . Falling behind on your loans can spiral into a hellish decades-long nightmare of interest rates and penalties soaring many times beyond the original sum . For federal borrowers , the government can garnish your wages without taking you to court , seize tax refunds and even Social Security . Allowing anyone who faces unreasonable student loan sums compared with their income to seek relief through the courts , as we do with every other kind of debt , would end the horror stories . It would also likely have several ripple effects . Private loans would decrease , and the federal government , facing a potential liability of $ 100 billion a year , would have a reason to get more serious about college costs and productivity . This could lead to , among other things , an expansion of the gainful employment rule , which sanctions schools that prepare very few of their students to be solvent . In the long run , we 'd probably see more innovative low-cost learning alternatives , such as the free online courses being offered by Stanford , Princeton , and MIT professors through the new ventures Udacity , Coursera , and MITx . Bankruptcy relief on student loans is n't just fair , it 's the first step to a more functional market in higher education .
The interest rate on student loans will soon double unless Congress acts . Anya Kamenetz says Obama showed concern over student debt during visits to colleges . But proposed relief measures do n't go far enough ; bankruptcy relief is needed , she says . Kamenetz : "... the president has not yet shown that he understands how much of a burden this problem is.