Outstanding student loan debt -- which exceeds $1 trillion, more than what Americans owe on credit cards -- is likely to be a major political issue this election year as students and their parents question the rising cost and value of a college education.
In Occupy Wall Street encampments around the country, some are demanding that the law be changed so student debt could be discharged -- erased -- in bankruptcy proceedings. Others are lobbying for states to increase subsidies and lower tuition at state schools.
The rate of defaults rose from 7 percent in 2008 to 8.8 percent in 2009, the latest official figures available. That's 320,194 of the 3.6 million people who began repayment that year, according to the U.S. Department of Education.
"This may become the first election in modern history where higher education rises to the level of being one of the top half-dozen issues," said Richard Vedder, an economist and scholar at the conservative American Enterprise Institute and author of "Going Broke By Degree: Why College Costs Too Much."
Most years, only 5 percent or 6 percent of the U.S. population is in college, Vedder noted, making higher education a "back-burner" campaign issue. But many students are coming out of college deeply in debt in a faltering economy with few good entry-level jobs. Student loan debt fueled one of the first and loudest complaints as the Occupy Wall Street movement mushroomed last year.
Two of the candidates seeking the GOP presidential nomination answered questions about making college more affordable during a November debate at Oakland University in Rochester, Minn.:
-- Rep. Ron Paul encouraged getting "rid of the loan programs," calling them a "total failure."
-- Former House Speaker Newt Gingrich said that with the current loan programs, students "stay in college longer because they don't see the cost." Instead, he recommended the approach of the College of the Ozarks, a Missouri school that doesn't offer loans but provides work-study options. He said it would be "culture shock for the students of America to learn we actually expect them to go to class, study, get out quickly, charge as little as possible and emerge debt free by doing the right things for four years."
For University of Pittsburgh English professor William D. Scott, who spent a recent sabbatical leave as a librarian at the People's Library at Occupy Wall Street in lower Manhattan, financial aid drives up education costs.
"Schools keep raising their tuitions because they know their students have easy access to these student loans," Scott said. "It's almost become a type of predatory lending."
Scott contends debt stresses jobseekers so much that they settle for anything, even dead-end jobs unrelated to their studies, and that this harms society as a whole.
"You can't miss a payment or be late on a payment (because) your credibility as a citizen is linked now to your credit score," he said. "If you want to have any kind of life after this, you have to ensure you pay these loans off."
Those who default are even more marginalized.
Green Party activist Maria Allwine of Baltimore said her husband, Richard Allwine, racked up $17,000 in loans for an Indiana University music master's degree he didn't finish. Now he faces a $79,935 bill from a collection agency, including unpaid interest charges and fees.
When he tried to get the debt discharged in bankruptcy, he found the law prohibited it. Everything the couple owns is in her name to prevent seizure by creditors.
The situation prompted Allwine to join Occupy Washington, D.C., in October. "It's usury," she said. "It's unjust. It's outrageous."
Alan Collinge has an aerospace engineering degree from the University of Southern California, where he took out loans totaling $38,000. Now he has a debt "north of $150,000" and full-time, unpaid work running StudentLoanJustice.org, which he founded in 2005. It advocates for student debt to be treated like credit card debt, which can be erased in bankruptcy.
The Obama administration last fall proposed limiting loan repayment to no more than 10 percent of a student's income for 20 years and forgiving any remaining balance, a change from the current 15 percent of income over 25 years.
A bill pending in Congress would undo a 2005 change in the bankruptcy code that prohibits private student loan debt from being erased in bankruptcy. Its sponsor, Rep. Steve Cohen, D-Tenn., doesn't see it going anywhere this year with a Republican-dominated House, but says it is gaining national attention.
Sallie Mae, which holds billions of dollars in student debt, supports reforms to discharge such debt in bankruptcy "for those who have made a good-faith effort to repay ... over a five- to seven-year period and still experience financial difficulty," said Patricia Cristel, a spokeswoman for the company.
Sallie Mae works with customers to help them "navigate difficult financial circumstances," Cristel said. But, she added, "The vast majority of student loan