As we approach the fiscal cliff, Treasury Secretary Tim Geithner was on the Suday talk shows informing that no deal would be made without higher marginal tax rates.

Yet, it seems that the money is already spent. There is currently a proposal for a “Student Loan Forgiveness Act“; Paul Bedard of the Washington Examiner takes a look at the numbers as they relate to the new tax “revenues”.

Americans concerned about what President Obama plans to do with the $1.6 trillion in new taxes he is proposing in the a “fiscal cliff” deal have a new worry: Will it go to bailout some $1 trillion in student loan debt, leaving enough to pay for less than two years interest on the national debt?

Critics are raising that possibility on the heels of a new Federal Reserve report that student loan debt has reached $956 billion, and it’s growing.

“Outstanding student loan debt now stands at $956 billion, an increase of $42 billion since last quarter. However, of the $42 billion, $23 billion is new debt while the remaining $19 billion is attributed to previously defaulted student loans that have been updated on credit reports this quarter. As a result, the percent of student loan balances 90+ days delinquent increased to 11 percent this quarter,” said the New York Fed.

Anxious Republicans skeptical of the president’s fiscal cliff plan and proposed $1.6 trillion in new taxes, mostly on the wealthy, are worried that the administration is planning new spending programs, not debt payments with the money.

They are turning their attention to a Democratic proposal to pay off student loan debt and the president’s focus on student loans during his many campaign stops at college campuses earlier this year.

The student-focused conservative group American Majority Action is among the groups raising concern about bailing out students.

“What we’re seeing happen in the student loan industry is mirroring the housing crisis of 2008 on a smaller scale. We’re still bailing out Fannie and Freddie. Artificially low interest rates and no required background checks allowed banks and GSE’s to loan money to people who could not afford houses, and what we saw were massive loan defaults which ruined people’s lives and costed taxpayers billions,” said Celia Bigelow, campus director for American Majority Action.

And the group’s spokesman Ron Meyer added, “The problem is, then all future graduates will want a debt-free education too. I suspect President Obama would love to make that happen. Adding another federal entitlement would certainly help Democrats win future elections.”