President Obama on Wednesday announced a plan to offer relief to millions of young people struggling to repay federal student loans. The new rules will let borrowers cap monthly payments on federal loans (but not private loans) at 10 percent of their discretionary income. Obama said the move would "make a difference," even if it isn't the sort of sweeping economic change America needs. Congress actually already approved this measure last year, eyeing a 2014 roll-out. Obama plans to use an executive order to implement the new rules in 2012. Will this really help struggling graduates?
The savings are negligible: The president's plan "sounds wonderful," says Matt Kiebus at Death and Taxes, "but even if those eligible take advantage, the savings are pretty modest." (Just a few dollars a month, by some estimates.) Besides, people with federal student loans would have received the same relief in 2014, anyway. This is "not nearly enough" to make a significant difference.
"Obama offers some student loan relief, but it's not nearly enough"
Every little bit helps: America's graduates have $1 trillion in outstanding loan debt, says Laura Clawson at Daily Kos. So Obama knows "this move is a very small drop in the very large bucket of need." But 14 percent of recent college graduates are either unemployed or working only part-time, so every dollar they save is helpful. "It's good to see the Obama administration thinking creatively about how to get around congressional obstruction."
"Obama bypasses Congress to offer lower student loan payments for millions"
Obama is actually doing young Americans a disservice: Such subsidies encourage young people to go to colleges out of their price range, says Kevin Glass at The American Spectator, even though their diplomas won't justify the investment. This only inflates the "massive bubble of debt" that made the economy so shaky in the first place.
"Obama's student loan bailout won't help anything"