After five years in the U.S. military and two tours in Iraq, 28-year-old Brandon Anderson finally expects to graduate next year from Georgetown University with a $26,000 starting salary.
He also anticipates graduating with $25,000 in student loan debt—a sum that will increase if Congress fails to stop the July 1 doubling of interest rates on Stafford student loans.
"It has been too much a couple times," says Anderson. "Because my family's already in debt…there have been times that I have felt the education that I'm getting is not worth it. The $4,000 … $4,500 that I pay per class is perhaps not worth it."
According to a report released today by the Joint Economic Committee, for the average student graduating in 2011, college debt amounts to 60 percent of their annual income. At around $1.1 trillion, student debt now exceeds auto loans and credit cards as the largest source of household debt, not including home mortgages.
They predict that a doubling of loan rates would cost students like Anderson, who borrow an average amount of about $27,000 to finance their education, an additional $2,600.
Congress is now locked in a fight over how to prevent student loan rates from doubling from 3.4 percent to 6.8 percent at the end of the month. But with fewer than two weeks remaining, there are still deep differences between Democrats and Republicans on the issue.
For students like Anderson, however, student loan debt only adds to a series of hurdles he has had to overcome to achieve economic mobility.
At 14 years old, he dropped out of his Oklahoma City high school, citing "family issues." He lived on his own for close to two years, getting his GED at 17 years old and joining the Army. But while he was deployed in Iraq, his mother became critically ill.
"My mom was put in a transplant list," says Anderson. He returned from Iraq on furlough so he could be with his mother when she died. "My dad had to retire early. My mom passed before she retired. We didn't have very good insurance."
Now, Anderson must cope with not only his mounting student debt, but his family's medical debt. He has taken two internships, and pinches every penny. It's still not enough," he says.
"After joining the military, I thought that the amount of money they paid for would go a lot further than where it goes now." Anderson receives around $20,000 a year from the GI Bill, which fails to cover the $55,000 to $65,000 per year of a Georgetown education.
There is bipartisan acknowledgment that the student debt burden has become untenable, with both Republicans and Democrats touting the slogan "Don't Double My Rate."
Obama's plan also calculates interest rates by adding a small percentage to the 10-year Treasury note, but locks the rates for the life of the loan.
House Republicans have a proposal that is similar to the president's but it adds a larger percentage to the 10-year Treasury note. And their proposal allows rates to vary like an adjustable mortgage, a feature that has prompted President Obama to threaten to veto the plan. Under the House Republican proposal, rates are capped at 8.5 percent.
Senate Democrats have put forward several proposals, but the primary one—sponsored by Senate Health Education, Labor and Pensions Committee Chairman Tom Harkin—would leave rates at 3.4 percent for two years, giving Congress time to find a long-term fix when they reauthorize the education bill.