TODAY | April 23, 2014
>>> let's turn now to the high cost of college. 70% of students will leave the universities this year with staggering student loan debt. the obama administration started a program to forgive much of those costs if graduates seek jobs in public service . but with huge enrollment, is it too successful, and actually driving up the cost of tuition? sharon eperson is cnbc's personal finance correspondent. nice to see you.
>> good morning, good to be here.
>> enrollment jumped 40% in the last six months. walk me through them. it sounds like you need a college degree to understand them.
>> these are income-driven repayment plans that we're talking about. it allows you to pay somewhere between 10% to 15% of your discretionary income that is your adjusted gross income . that is above 150% of the poverty level. again, getting very technical here. but the important thing to know is that once you keep on-time payments, you can then do this for 20 years, or 25 years, depending on when you took out the loan, and then the loan can be forgiven. if you go into a public sector job, that loan can be forgiven in ten years.
>> who does it help?
>> it helps a lot of people who may be not thinking about public interest jobs because they're afraid of the debt they're going to accumulate. it's also great for those who may be on the line of defaulting on their loans. that's really what the administration was trying to work toward.
>> so it helps the student because you get to get rid of some of your debt. it helps the government because they get rid of some of the defaults on those loans. and it helps the community --
>> for those people who wanted to go into public interest jobs and were saying maybe i can't afford to take this job, now maybe it's more affordable.
>> but there are some fears that these programs are now so popular that this is going to cost the government simply too much money.
>> there was one study that came out that said it could cost somewhere around $14 billion a year, and that's just for two particular type of income driven programs, the most popular, which is the income based repayment plan and the new obama plan pay as you earn .
>> and an unintentional side effect of this, there is fear that the cost of tuition is going up in part because of these programs. colleges saying wait, more people can enroll, they can afford to pay because they're going to get some of those costs covered, so let's raise the price.
>> what's very interesting is one of the organizations that was a chief architect is saying there are some unintended consequences, one is that the pressure on colleges to keep the cost of tuition affordable has gone away, particularly when talking about graduate school , law school , medical school , is now very expensive. there's also been some talk about making these programs mandatory.
>> what's the best way for people to find out more about the programs and if they quality?
>> best to go to studentloans.gov to find out about the repayment plan, see if you qualify. there's some questions that are asked there to see if you're the right candidate for those types of programs. but that's one place to go. if you have a sally may loan, sally may also has some tools on their website that can help you figure out the best repayment plan.
>> 70% of people leaving college this year will have student loan debt.
>> and those prices keep going up for that tuition.
>> all right, sharon, thanks very much.
>>> coming up, carson takes us behind the scenes of the intense live