Nightly News   |  May 31, 2013

Obama urges Congress to act on student loan rates

An interest rate hike on new student loans will take effect July 1 if Washington lawmakers can’t agree on how to stop it from going into effect. With the cost of college rising faster than family incomes, student loan debt has become a big concern for families across the nation. NBC’s Rehema Ellis reports.

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>>> a big push by president obama today on an issue that has a lot of families worried, finding a way to pay for college without drowning in the debt that can come of it. the immediate concern, the interest rate on federally subsidized student loans is set to go up unless congress does something. our chief education correspondent rehema ellis has our report tonight.

>> good morning, everybody. have a seat.

>> reporter: surrounded by college students at the white house today, president obama urged congress to hold the line on federal student loans .

>> higher education cannot be a luxury for a privileged few.

>> reporter: without an agreement, interest rates on subsidized stafford loans will double on july 1st to 6.8%. that will affect about 7 million college students taking out new loans. and if this sounds like da?j? vu.

>> the average student with these loans will have an additional $1,000 in debt.

>> reporter: most political observers expect a compromise like last year but say it won't fix the problem -- more people borrowing more than ever before. two-thirds of recent graduates had an arch debt of more than $26,000. 13% owe more than $50,000. many are having problems keeping up with payments. last year overall student loan debt reached almost a trillion dollars. the problem, the cost of college is going up faster than family incomes. a big concern for students like melissa rubio who graduates in two weeks from depaul university in chicago with almost $50,000 in debt.

>> my aspiration going to college was to be able to support a family in the future, not struggle like my parents have. now i feel like i'm in a worse place than my parents ever were.

>> for the first time in american history we are sending a generation of young people into their lives with a negative net worth , a financial ball and chain around their ankle.

>> reporter: even as students graduate with high expectations, they will also be walking away with more than just a diploma. while there is a lot of debate about whether the cost of college is worth it, studies show on average college graduates earn substantially more than people without a degree.

>> thanks for your reporting tonight.