NEW YORK (MainStreet) — Student loans for the last few years have exponentially grown to more than $1 trillion dollars, according to the Consumer Financial Protection Bureau. Coupled with the rising costs of college, which has risen on average of 1.6% over inflation according to the College Board, student loan debts are becoming way too common.
More than 60% of students are graduating with an average student loan burden of close to $30,000, according to the American Student Association.
While President Obama's student loan relief plan expects to help more than 5 million struggling Americans with their student loan debt, the question remains - is it enough?
The Pay as You Earn Program
The executive order signed by President Obama expands the current program – Pay as You Earn. This program allows students to cap current student loan payments to 10% of their income and provides forgiveness after 20 years. However, only certain loans qualify and borrowers must show a partial financial hardship.
Currently, the program excludes borrowers who have taken out loans prior to October 2007. The President's executive order would extend the program and allow those who have taken loans prior to this date to qualify.
In addition, the executive order aims to work with student loan providers to help borrowers remain out of default. Keep in mind, the executive order does not go into effect until December 2015.
College grads need jobs
While the student loan relief plan is a step in the right direction, there are many other economic issues that still need to be addressed. One of the key issues is college students are finding it difficult to find employment. According to a survey conducted byAccenture,only 46% of the 2012-2013 graduates were able to gain full time employment upon graduation. The 46% represents a significant decline from the 68% of the 2011-2012 able to obtain full time employment.
Accordingly, many college graduates are forced to forego the work place and pursue advanced college degrees in lieu of employment. One such example is Ellissia Hill, a graduate student at Old Dominion University in Norfolk, Va.
"I made the decision to get my masters degree the summer before my senior year," Hill said. "My advisor informed me that obtaining my advanced degree would increase my chances of gainful employment."
Of course, that strategy often comes with the burden of more debt and uncertain prospects for gainful employment.
So, while Obama's plan with help some individuals, there is still much more work to be done.
--Written by Kemberley Washington for MainStreet