EXECUTIVE ORDER: Actual student debt relief or political ploy? - KMSP-TV

EXECUTIVE ORDER: Actual student debt relief or political ploy?

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President Barack Obama is touting the action he took on behalf of students who are struggling to make payments on their loans, but while he calls it debt relief, others say the problem is bigger than his proposal.

"A higher education is the single best investment that you can make in yourselves and your future, and we've got to make sure that investment pays off," Obama said.

Some economists see Obama's decision to expand his loan repayment program as a political stunt. Others call it reasonable relief for students who entered the work force right when the recession began.

"Something must be done because this is a huge debt crisis across the country and a lot of people have it," Nick Jones said.

Looming over America's college graduates is a collective $1.2 trillion in student loan debt. Obama's expanded repayment program is designed to help young Americans manage it better by capping monthly payments at 10 percent of a borrower's income.

Low-income earners have their balance canceled after 20 or 25 years of on-time payments, and public sector employees, like teachers, may have their debt forgiven in 10.

As a graduate himself, Jones approves.

"Especially with other problems like Social Security and the other mounting debts we already have, it'd be really great to have some financially stable American citizens out there," he said.

A 2010 law gave the same relief to students who took loans out after 2007; however, Obama's executive order expands the program to include an additional 5 million students who borrowed before 2007.

Currently, the average student graduate owes around $29,000, and economist Chris Phelan says the move is really just a political stunt because students still must repay what they owe.

"They still have to pay; they still have to pay with interest," he said. "They just have to pay it over 20 years instead of 10."

In a written statement, House Speaker John Boehner noted that the order does nothing to reduce the cost of pursuing higher education or provide jobs to the graduates still struggling to find one. With tuition costs rising, Phelan says it's time for universities to pitch in too.

"I don't think it would be a bad idea to give the universities a little skin in the game," Phelan said. "If a student can't pay back [his or her] loans, then the university that gave them the degree needs to at least take a little bit of a hit."

Next, lawmakers will decide whether to lower tax bills for millionaires or student loan bills for the middle class. The Senate bill is expected to face strong pushback from Republicans and is said to have little chance in the House.

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