Finance / Investing Author: Elisheva Wiriaatmadja

Obama will try and come out as a hero by proposing a new budget tomorrow on Valentine's Day 14 Feb 2011, but will consequently give more businesses to private banks giving out private student loans. The budget reaches $3 trillion plus but proposes a deficit cut of $1.1 trillion over the next decade. He will be cutting down deficits on military spending and limiting tax for the wealthy. However, there is always a catch and always somebody else who will become the victim to pay the burden of the spending cuts. Other areas will be paying for the consequences of the budget plan and one of them is education.

Graduate students will be facing more debt as Obama decides to save on Pell Grants and other higher education financial aid programs. Currently students pursuing in graduate schools are able to take out two grants in one year. This will no longer be possible with the new budget. As graduate students are getting less and less opportunities to take out "free money" that they do not ever have to repay, such as schollarships and government grants, they will turn to federal loans as well as private student loans.

This new budget will eventually make the dream of pursuing higher education more and more unattainable for Americans. Ironically, it was only a few months ago (Sep 2010) that the good news to borrowers of private student loans was out. The Private Student Loans Bankruptcy Fairness Act of 2010 was passed a House subcommittee chaired by Tennessee Democrat Steve Cohn, a breath of fresh air of freedom from modern slavery. However, this fresh breath didn't last very long. With the new budget proposal by Obama, scholarships and grants will become less and less and students will eventually be forced to turn to federal and private student loans, adding even more to their existing debt.

Huffington Post's student debt project has received over 100 participants from their readers to submit their private student loans stories. It is shocking to read how much in debt these young people are already at their age. Even with the full advantage of Pell Grants, students are already getting themselves in debt as deep as $200,000. The only person who has no debt is Stephen Weigant, 24, undergraduate at the University of Oklahoma. His story, "I am 24-year-old freshman and I am going to graduate when I am 27. When I do though, I will be debt-free and it only took four years in the Marines. It sucked and was hard work but it was totally worth it to get free college tuition. There is the hard way and the easy way and sometimes the hard way is better off in the long run."

However, not everybody chose the hard way that would put their lives on the line for free college tuitions. Jennifer Dessinger, 34, for exmple, is a graduate from Art Center College of Design and is $117,000 deep in debt. Charlie Preston, 20, is a resident physician at John Hopkins School of Public Health. He is $250,000 in debt and to Huffington Post, he tells his story, "To all the students who are thinking about borrowing private student loans from private banks, be very careful, and most importantly, demand ethical behaviour."

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