President Obama's new debt-relief initiative may be limited in scope, but he only stands to gain popularity for having offered it
The student loan relief plan President Obama announced on Wednesday as part of his "we can't wait" for Congress tour rings a lot like the refinancing plan he announced on Monday for underwater homeowners. It allows Obama to take credit for addressing an economic grievance of voters, but is a modest move that doesn't go anywhere near to solving the root of the problem.
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In the case of the student lending announcement, the "pay as you earn" part of the plan would accelerate and improve a program to let roughly 1.6 million low-income borrowers cap their loan payments at 10 percent of their discretionary income and forgive the balance of their debt after 20 years. The other piece would be applicable to about 5.8 million borrowers who could save up to half a percent in interest by consolidating Federal Family Education Loans with government direct loans.
Like the refinancing plan, however, the student lending plan is essentially a patch that would be applicable to only a select slice of borrowers struggling with mounting debt, and it has many limitations. The success of both programs relies on their implementation, and they could have a tough time reaching as many as envisioned.