No matter what you think of him, President Obama's remarks about student loans during the State of the Union ring true for millions.

Obama's prepared remarks included 6,778 words and the 41 words about the massive burden posed by student loans to millions of Americans were spot-on:

We're offering millions the opportunity to cap their monthly student loan payments to ten percent of their income, and I want to work with Congress to see how we can help even more Americans who feel trapped by student loan debt.


Reforms have been made when it comes to student loans, but there is absolutely more that needs to and can be done to help students everywhere.

Massive growth
Since 2003, the total debt of individual Americans has ballooned from $7.2 trillion to $11.3 trillion, an increase of 56%. And while that is certainly a huge gain, consider that the student loan debt held by Americans has quadrupled, growing from $241 billion to $1.03 trillion.

Over the last 10.5 years, the total debt has risen by an average of 4% per year, but student loan debt has risen by more than 14% per year. 

To put it all on a relative basis, student loans went from just being a little more than 3% of total debt in 2003 to more than 9% at the end of September. Excluding debt related to housing, those numbers are even more staggering, going from 12% to 36% of total debt:

Non-Housing Debt | Infographics | $in Trillions.

The combined total of auto loans, credit cards, and all other loans didn't even budge over the past 10 years, staying at $1.8 trillion in both 2003 and 2013. And while it would be easy to think this debt is a result of more and more students getting college degrees, the reality is while that is true, the staggering increases in the cost of college have also resulted in the average debt faced by students ballooning as well: 

Average Student Loans | Infographics.

In 2004, 65% of students graduated college with student debt, and in 2012, it was 71%. And 600,000 Americans who began repaying student loans in 2010 defaulted on those loans by 2012, representing nearly 15% of borrowers.  

All of this is to say there is no denying student debt is increasingly becoming a major problem in the United States.

By Lendingmemo

Source: LendingMemo on Flickr.

What can be done
In 2010, Congress approved the Pay As You Earn plan, which sets up student loan payments based on a person's adjusted gross income and family size. It reduced the monthly payments on direct student loans from 15% of discretionary income to 10%, and also assured after 20 years of consecutive payments -- 10 years for those in public service -- the remaining loan balance would be forgiven.

While these are certainly noble initiatives, the reality is, more needs to be done. Whether it be through greater accountability with college costs, more education earlier on surrounding the true financial burden posed by student debt, better information regarding the benefits of community colleges, or a litany of other initiatives.

Ultimately, President Obama is right in asserting that it will take a collaborative, bipartisan effort to stave off the potential crisis that awaits the insurmountable levels of student loan debt.

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