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The new tracking system put in place by the Federal government has identified how there is a significant rise in student loan defaults. At least 13.8% students who began the repayment on their loans in the year 2008 have defaulted.

After three years 10.8% graduates of four year public colleges defaulted and at least 25% graduates from for-profit institutions defaulted in the same three years. According to Lindsay McCluskey, the President of United States Student Association, these indications are hugely disturbing and there is an urgent need for strengthening of higher education priorities at the national, state and local level.

McCluskey said that the unemployment rate is higher than the national level and many find it debilitating to start their post-college life with a huge debt. In Iowa, at least 203,000 students receive Pell Grant benefits according to the Iowa Independent report.

Pell Grants will be down to pre-stimulus levels according to the FY2012 budget proposed by US Rep. Paul Ryan (R-Wis.). The maximum grant will be brought down to $3040 from $5550 per year as a result of the current proposal in the House. This is the lowest since the year 1998.

By the year 2013, at least 1.4 million students will be ineligible for schooling even as the grants go down to $2090. Obama administration’s proposal is about scaling down of Pell Grants and doing away with summer assistance even though the 2012 budget keeps the grant minimum at $5550.

Another argument by Ryan says that the average tuition fee increases even as there is an increase in Pell Grants as seen in the University of Oregon 2005 study. Higher Education Economists defending against the study however opine that there is no link between tuition increases and federal aid.

Non-profit universities strived to do away with Pell Grants cut by pleading with the US senate as they were apprehensive about the effect it will have on other students and their budgets says the HELP committee head US Sen. Tom Harkins.

Major companies were criticized by Tom Harkins for avoiding taxes. He pointed out to the $5 billion brought in last year by the Carnival Cruise Lines. According to Harkin, they paid 1.8 percent as opposed to the 35% tax bill.

President Obama’s idea of Pell Grants scaling back was also criticized by US Rep. Dave Loebsack after hearing from colleges in Iowa. According to him, education makes a huge difference in a person’s life. He said that students must have year round access to Pell Grants.

Ranking fourth in the nation, Iowa has an average of $28,883 student debt. The past decade has seen a rise in the number of students borrowing for college education and taking out huge loans according to the study conducted by the Pew Center for Research. As compared to 56% in 1996, the year 2008 saw 60% of students borrowing.

For the first time, the year 2010 saw credit card debt being outpaced by student loan debt. In 2011 the figure is expected to touch $1 trillion. Meanwhile, President Obama has reassured college students that Pentagon’s budget will be trimmed and the wealthy will be taxed in order to scale back on student aid.