An insightful article by Alexandra Thomas from HLN about student loan debt:

A college education is now becoming a Catch-22, keeping more and more Americans from reaching financial stability. To compete in many of today’s job markets, having a college degree is essential. And unfortunately, a lot of Americans now have to consider whether they’re willing to spend the rest of their life in debt for that degree.

In an effort to make more borrowers aware of the options available to them for managing student loan debt, President Obama announced the Streamlined Application Process for Income-Based Repayment Plans. The IBR plan for Federal student loans currently allows borrowers to cap their student loan payments at 15 percent of their current discretionary income, which helps keep debt at more manageable levels. Beginning in 2014, that cap will be reduced to 10 percent. Under the IBR plan, borrowers are also eligible to have the remaining loan balance forgiven after 25 years of payments.  Obama’s proposal is aimed at not only making more people aware of these repayment options, but also making the application process easier.

The proposal promises that by September 30, 2012, there will be a new streamlined online application process that will allow borrowers with federal student loans to import their income data directly to the IBR application. That means borrowers will be able to complete the repayment plan application in one sitting and will no longer have to contact their loan servicer first. Obama’s proposal also promises to provide online and mobile resources to teach borrowers and potential borrowers about federal student aid.

With federal and private student loan debt approaching $1 trillion and now topping credit card debt, America is facing a major economic crisis, especially since so many young people today have no way of even beginning to pay back what they owe.

The cost of that degree is pushing an increasing amount of students and their parents into irreversible debt and bankruptcy, according to a report by the National Association of Consumer Bankruptcy Attorneys, a group that represents consumer debtors and their lawyers.

More than four-fifths of bankruptcy attorneys say they’ve seen a notable jump in the number of potential clients with student loan debt, while nearly half say they’ve seen a significant increase. The survey of 860 bankruptcy attorneys in the U.S. also noted that debt collections by student loan providers have become increasingly aggressive in the past 18 months, creating even more problems for today’s borrower.

So, knowledge is power and all, but at what cost? The price of a degree is one thing. And yes, college costs are always growing. Average public school tuition rose 8.3%  last fall from 2010, according to the College Board. But high unemployment also looms over America’s youth, and they’re struggling to pay back their loans. Equifax saysstudent loan delinquencies jumped 14.6% from a year ago. That debt doesn’t just go away, either. Student lenders have broad powers over borrowers’ wallets. They can take future wages and even seize tax refunds.

And it’s not just Americans in their early twenties facing these threatening levels of debt. According to the NACBA report, recent borrowing has also grown very quickly for those in the 35 to 49 age group, with school debt increasing by 47%. And on top of that, it’s not even just students, it’s their parents too. Loans to parents to pay for a child’s college education have increased 75% since the 2005-2006 academic year. About 17% of parents who had a child graduate in 2010 took out loans, up from only 5.6% for the 1992-1993 school year.

With few or no options available for distressed borrowers, parents who co-signed loans now face the loss of retirement savings, retirement homes and other valuable assets. Parents now owe an average of $34,000 in student loans and over a standard 10-year repayment period, that number can jump to about $50,000. Translation: Goodbye nest egg.

Although it all sounds like doom and gloom, HLN Money Expert Clark Howard says there are ways to reduce the cost of college and educating yourself on the federal student loan process in general is useful in the long run. In order to make college affordable, you may not start out studying where you want to. Going to a community college for two years and transferring can be a lot cheaper than attending a big private college with a famous name for four years. And no one is going to ask you where you started school.

State school is also a cheaper option. Going to a state college over a private one could reduce your costs by 80%, depending on the schools and the state.

If you do have to borrow for school, Clark’s rule of thumb is to only borrow what you can afford under the federal student loan program. Despite all the hype, those loans historically have been less damaging than private student loans in terms of interest rates. Clark also says never take out more in loans than your likely first year’s income on the job your degree will get you. That will help you manage the debt.

Student loan outfits have special rights under the law that could eat you up if you ever defaulted on a loan. There are actually a lot of ways lenders can get their hands in your pockets. If you default on a student loan, your lender could garnish your wages, seize your tax refund and even sue you for what you owe.

Student loans can be very dangerous, but if approached and handled correctly, you should be able to manage them.