The crushing impact of student debt

After she gets her diploma, Katrina Manalac, a senior at the University of Illinois at Chicago, will have $50,000 in unpaid student loans.
CBS News

President Obama announced a plan Wednesday at the University of Colorado-Denver that could help millions pay off their student loans. It will let borrowers consolidate their debt into a single government loan at a lower rate.

But student debt in this country is approaching $1 trillion. On Wednesday, the College Board reported tuition and fees at public colleges rose by more than $600 this year. CBS News correspondent Dean Reynolds looks at what that means for students.

It would be nice if Katrina Manalac, a senior at the University of Illinois at Chicago, could just concentrate on her studies. But there's something else on her mind.

After she gets her diploma, she will have $50,000 in unpaid student loans.

"It's a really overwhelming feeling," Manalac described on what it's like. "As much as I don't want to think about it, I have to think about it."

She needed the loans to cover the ever-escalating costs of going to school -- costs that have risen 8.3 percent at public universities in just the last year to an average of $17,000, even for in-state students.

"The biggest reason for tuition increases quite simply are state budget cuts," said Terry Hartle of the American Council on Education. "In the unrelenting mathematics of public higher education, state budget cuts equal tuition increases."

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Now that the federal stimulus money to the states is running out, the squeeze will get worse.

In cash-strapped Illinois, the state owes nine public universities half a billion dollars in delayed payments. The consequences of that delay are larger classes, a faculty hiring freeze, and higher tuition.

To save money, Manalac had to move from the campus to her parents' home in the suburbs.

"Did you want to be living with your parents in your senior year?" asked Reynolds.

"No, I did not," Manalac said.

She wants to go to graduate school to become an occupational therapist -- meaning more loans and more debt.

Here is what CBS News' research department found out about the value of a college degree: The unemployment rate for high school graduates, -- 25 and older who didn't go to college -- is 9.1 percent. For those who have a bachelor's degree, it's 4.8 percent.

  • Dean Reynolds

    Dean Reynolds is a CBS News National Correspondent based in Chicago.