>> hello, i'm tony harris, and you're watching al jazeera, our top stories. a tour bus carrying national guard troops has crashed in north carolina. the crash occurred in mooresville, north carolina, 250 miles north of charlotte. 54 passengers were on board and 11 transported to the hospital, one in critical condition. we have confirmed that one female soldier has been taken to the emergency department even though her condition is unknown. we'll continue to update you as we get more information. out of iraq a suicide-bomber has attacked in northern baghdad. the police confirm the latest death toll stands at 28. more injured.

major nadal hassan was found guilty of the fort hood rampage that left 14 fellow soldiers death. and a military jury sentenced sergeant robert bales to life without parole. bales pleaded guilty in june of 2012 to a shooting spree. it was part of a deal to avoid the death penalty but he will be ineligible to receive a chance at parole. those are the headlines. i'm tony harris. "inside story" is next. >> high costs, high debt as the president announces plans to make universities more affordable. we'll look at how the u.s. education system compares with others from around the world. from washington, this is inside story.

[♪ music ] >> welcome, i'm libby casey. a comin college education in the united states costs more than anywhere else in the world. despite the high bill american colleges are slipping in the international rankings. on thursday president obama introduced a plan that he says will help make college for affordable. >> i'm proposing major new reforms that will shake up the current system, create better incentives for colleges to do more with less, and deliver better value for students and their families. >> so what would the president's plan mean for american students and their future? we put that question to a recent

graduate. fiona who lives in washington, d.c. told us her story. >> i am 29 years old. i have an undergraduate degree in ecology, which is just a branch of biology and then a masters in environmental science and management, and between those two i have a total of $85,000 in student loan debt. >> what does that mean for monthly payments. >> monthly payment versus varied depending on how much i knew about the payment plans available to me, how much money i was making, but at this point in my life, which is the lowest monthly payments i've ever had, it's $370 a month. >> how painful is that or how easy is that to pay with your current income and where you're at in your life with your career. >> at this point i would say i'm managing them fine because in the last year and a half i've had to teach myself to do that. but upon immediately graduating from grad school, really no knowledge on how to manage it,

what options were available to me. i think at that time it was the most difficult to deal with. it became a source of problem in personal relationships. it really kind of pulled a lot of things in questions for me in my career, am i doing the right thing, did i make the right choice in my degree, it was really tough. >> did you have any idea what you were getting yourself into when you applied for colleges, went to school, got ready to go to undergrad and graduate and took out tens of thousands of dollars in loans? >> um, no. not really. i think it just was a natural process, right? you kind of thing you come out of high school. college is a natural next step. because i come from an immigrant background and my mom is the one who raised my sister and myself, after we moved to the states i don't think that learning about the american college system was her priority, so there was very little information about hey i'm the first person going to college, i could probably get a

scholarship or grant to cover my expenses. i didn't, and there was no information about that, so loans. grad school was the next step thinking higher education was the way to go. i pulled all the loans i needed for it. quite honestly, i didn't even know what the total was until i was nearing graduation from grad school. that's not just my story, but a lot of people's story. >> you're 29 years old, you have $80,000 in debt. how old will you be when you pay off your college loans? >> it's scary to think about this. probably about 56. >> fiona, did your college degree and your graduate degree prepare you for the career field and entering the workforce as an adult? >> you know, it's funny. i look at the undergraduate degree and the master's degree separately. undergrad was difficult coming out of that i did not feel prepared for the work field at all. my degree was fairly limiting in

what i wanted to do, and i did not feel like during college i was able to cultivate other areas i would have been good at to work in. the master's degree was great in terms of preparing for real world and speaking with people. at this point i'm not working in either one of those fields but i find value in both of them. >> joining us to take a closer look at the president's new plan is david vice president for post secondary education, former assistant secretary of the department of education. and from las vegas, natalia abrams, a group that advocates for universal affordable education. and neil associate director of cato's center for educational freedom. first here are the facts and here are the key points of the

president's plan. it starts with the rating system that ranks universities on how much they cost and how many students they actually graduate. schools that keep tuition low and graduate a high percentage. students get more taxpayer dollars, and those who don't won't in theory. but the president needs congressional approval to make this change. and it expands the pay as you earn program that caps 10% of a recent graduate's salary. what would the president's proposals mean for young people like fiona, who we just met. >> first, it will mean that they have access to greater information to post secondary choices available to them. the kinds of things that fiona was talking about not knowing alternative ways to finance it, that would be dressed through executive action, no legislation required. then the ranking system that he would devil would be used to

decide how much money critical institutions would get, making sure that the students who are most successful and attending the most successful institutions get the most aid. secondly it would stimulate innovation, getting colleges to do what they need to do to increase graduation rates, reduce time to degree and drive down costs. the last thing is make sure more information is available about pay as you earn payment options. fiona made the point really very well that sometimes it takes a while to get in the right repayment plan. getting in the right repayment plan shouldn't be an accident. the president has called on secretary duncan to inform people about the options, and taken together those elements will dramatically improve the outcomes for our students. >> now natalia, does the president's plans go far enough? >> no. the short answer is no.

but we at soon.crisis.argue are thrilled he's speaking about this. the fact that he's talking about this after the rate doubling vote and not during an election year shows it's something that he cares about. it's our job and the job of other organizations to continue to push, but we're so happy to hear that he's speaking about this, and these reforms, they're good enough, but we can do better. >> tell us about the congressional history here on student loan rates since you brought it up. explain it for us. >> so last year and this year there were two votes to double student loan rates. this year actually in july 1st the rates did double to 6%. then there was a vote in congress a few weeks ago which brought the rate back down to 3.87%. and so that was better, obviously. we do not want 6% rates. the only problem with that right now is that it ties it to the federal treasury note. but there is a cap of i believe

8.25% which we could see in the next two--excuse me, next four to six years. but hopefully with these measures something will be done before we ever see 8% interest rates. >> kneel, grade the president's proposals for us. >> it's hard to give it a grade. a lot of what we're hearing sounds good, at least on the surface, producing more information about graduation rates and things like that. but we have to look at the timeline. he's really saying that we're not going to have this rating until 2015, and we won't have that until we've had town hall discussions with stakeholders. we don't have a firm plan. i think what is really going to put the meat behind this, the real power behind it would be when you link these ratings to excess to a. it's not a necessarily a good thing but puts pressure on schools. we won't see that proposal until 2018. that's got to be approved by congress.

so it sounds good, but there are so many details that we don't know that are crucial, the components of the rating, the waiting of those components, and what the ramifications will be based on how you do with those components. all that is missing now. so it's hard to say what grade this is going to get. >> what do you think about the philosophical decision to link schools and their graduates to how much aid they should receive. >> you have to remember all students are different, all schools are different, and it's bothersome that you might have a school that focuses on the arts where people are willing to take on debt to do something that is not going to have a big pay off, and they'll get treated differently than someone who goes into, say, engineering that does have a big pay off in terms of what you're going to earn but may not be fulfilling as an individual. it's hard to take a blunt

instrument on something that isn't really blunt. >> how can you use this as a rating system to evaluate a successful school. >> we've had rating systems for years. those ranking systems create the problem that we have today. they invest in things that don't return value in terms of the outcome of students. if you create a good rating system then you can drive the behavior and direction we want to do, which is, you know, the thing about this is we know what to do. there are institutions in the united states that serve low income students and they have very good graduation rates and high job placement rates and high earning outcomes, and we should be driving to get the outcome for consistently. >> how do you feel about holding

the pay off to 10% of what they're earning. >> people when they take on these loans they do bear some responsibility. we tend to act like the students shouldn't have been doing more research into what they were taking on. and we've got to remember there is another side to this, and that's taxpayers who are real human beings. the concern is that if you're not paying back the total of what you promised to pay back, that's money somebody else has to put into the federal government to fund all sorts of other things. and we can't forget those are real flesh and blood human beings who have to bear that extra cost and they weren't the ones who greed to those loners loners--thes--these loan terms. >> we'll be back in a moment.

>> welcome back. you're watching inside story. on today's show we're looking at president obama's new plan to make college more affordable. during his speech on thursday president obama said nothing is more important to the idea of economic mobility that you can make it if you try than a good education. let's take a look at how beneficial a college degree actually is? a study by the brookings institution shows graduates earning half a million dollars more than non-graduates over the

course of their careers. and a study at georgetown university puts that number even higher, but researcher by the heritage foundation who took into account student loads, and put the number at $300,000. neil, and in las vegas, natalia, and neil, associate director of kato's educational freedom. you're out of college, your brain is full, what does it mean for your earning potential. >> it has dramatic affect on a student coming out of college. each year of college, each year beyond high school drives up earnings. i think whether you talk about

the brookings study or the heritage study they all show there are tremendous benefits from the earnings perspective for college graduates. >> how about higher education. what if you go farther, you get a master in engineering or medical degree, what does that mean for your future? >> well, all the studies say that you're going to do better, you're going to make more. but you know in the short term it just doesn't feel like it. right now we're seeing roughly 50% of people 18 to 34 that aren't buying houses, about 40% aren't purchasing new cars. i think in the short term we are seeing an affect on upward social mobility. maybe in the long term, but you know, i've been out of college for the last ten years and right now it sure doesn't feel like i'm quite doing better than some of my friends who didn't go to college. i think it will get better. i value my education. it was one of the best decisions i made but it's scary right now

working towards retirement funds, having children, and really investing in my future. >> natalia, take that out to the national level. if americans are having trouble paying off their debt, how does that hamper innovation or americans' availability to take risks and try new things if they're caught up in loans? >> first and foremost the mental affect. i have so many friends in sticky loan situations. some have gone so far as defaulting. it's that thought that stays in their head all the time. and it makes them not think clearly. they have to take jobs that they might not want to take because they need to make a salary versus interning or taking position where is they can move up in their career. i think we're seeing students or graduates not feeling the freedom they could feel if they didn't have this large burden of debt. >> neil, square this for us. you want to get ahead in life.

you want to go to the best schools and the best dress but you have a lot of debt because those come with big price tags. what does that mean for americans who want to get ahead. >> first of all when you look at the average earnings, first you see that wide disparity of what people are estimating because there are a lot of things to consider. the other really important part about this is that he is is the average. there are a lot of people not at that average. it's crucial to understand if you major in one thing like engineering, you stand to make a lot of money. if you major in something else like psychology you stand to make a lot less. you have to look at all of these things. then the question is the debt. for some people its worth the debt. if you take on average debt or more to become an engineer you can pay that off right away. others probably shouldn't take on that debt. the root question, i think what the president is trying to deal with is the price of college just too high? it might be great to go to

college and go ahead an education, but maybe it should cost 50% of what it costs now. there is good reason to believe that it is heavily inflated, and it might be inflated because of so much aid. >> i disagree that it's because there is so much aid. research history has shown in terms of federal grant aid there is no impact. loan aid, i haven't seen anything compelling that says loan aid drives up costs. there are reasons that cost versus gone up. states di invested, they don't have the endowment revenues that they can apply to the cost of students, and the for-profit schools, they had tremendous demand as the economy was soft, and they priced accordingly. there were lots of things that were happening, but i do think that we really need to look very hard at the driving down the

cost of education and the price, looking at things that institutions can and should do to get their costs under control. looking very hard at ways to economize, save money, deliver degrees in a much shorter and less expensive way. and the president is calling for that innovation which i think is so critical. >> we'll take a quick break, and when we return how u.s. higher education tax up compared to the rest of the world, and what we can learn from other countries. stay with us. ç]

>> welcome back to "inside

story." u.s. universities rank oh among the best in the world. this year 13 out of top 20 universities are here in the u.s. but they are also the most expensive, and it's not clear if students are getting what they paid for. according to the global higher education rankings on average students in the u.s. paid $14,000 a year to go to college. in australia you would pay $7.5000. in canada, students pay about $6,000 per year. and universities in england are subsidized by the government. students there just pay $5,000 a year. in france higher education is government funded, so out-off-pocket costs are very low, and students pay $600 on average a year. well, still with us david, vice president for post education, and from las vegas, natalia

abrams, the co-founder of student debt crisis. and we're also joined by neil mcclumcclue ski. david, why is it so much more expensive to go to college in the united states than other countries. >> you said it, because of public subsidy. our institutions were publicly funded vastly over the last three decades, and we've seen an erosion of that subsidy and that has largely decreased. >> you're shaking your head. >> it's true. one of the reasons they're so expensive we subsidize more and more the student rather than the school. historically schools started off largely as private school. you only have public schools in

the 1860s and 8090s. it's not that we've had massive decreases in subsidy of those public schools. states have increased the total amount they spent on the universities on a per pupil basis that's gone down but not precipitously. that's because enrollment has gotten so much bigger. >> natalia, what would you do. you said the president's plan needs to go farther. >> we sported an initiative in the house that was done by representative karen bass, which would take income base repayment a state further. it would be ten years instead 20 or 25, and 10% of your discretionary income. we feel that it shouldn't take 10 to 20 years. you heard fiona, she'll be 52 when she pays off her student

loan debt. that's mortgages. it was never intended for a college loan to be the same as a mortgage, 20 to 40 years. so we would propose there would be with a faster repayment plan. the great thing about this plan is that it would allow the defaulted borrower to enroll in this abraham. right now there are no programs out there unless david may know of something, but to my knowledge there are no programs out there for students who have defaulted to get back in a system and figure out a reasonable way to pay off their debt. we want people to pay off their education debt. it really is important. i agree that there is some personal responsibility, but we have to create a fair system so people feel they can pay it off in a reasonable amount of time, not 30 to 40 years, and when they're in their mid 50's. >> what would you do to improve the situation? >> i think we have to do which is going to sound counte counter

intuitive. we need to phase out student aid. there is empirical evidence that schools raise their prices in large part because they can and student aid allows them to do it. >> i don't agree with that assessment. the evidence so far is that aid doesn't drive up costs. i think there are lots that institutions can do and will do if we put the right incentives in place. >> we have to leave it there. thank you for joining us today. that's it for now for the team in washington, d.c. and for me, libby casey. but you can keep the conversation going by logging on to our facebook page and send us your thoughts on twitter. our handle i. thanks for watching.