Obama does his best to alleviate student debt

President Obama issued an executive order this week to help reduce the financial burden of a higher education. It was a half-measure by his own admission, though it will provide some relief to about 5 million people.

It was all the president could do.

There is no hope that a politically deadlocked Congress would pass more effective legislation or, better yet, would address the fundamental causes of rising student debt that now totals $1.1 trillion.

Obama’s order expands the 2010 Pay As You Earn plan that caps monthly payments on student loans at 10 percent of a person’s discretionary income – a number reached via a complicated formula that varies by state. The plan previously only applied to loans incurred after 2007. It will now apply to all outstanding student loans.

College graduates who started their careers in low-paying positions have benefited from the Pay As You Earn plan. And under the original plan’s provision for total debt forgiveness after 20 years – shorter for some, such as educators and nurses – many older loans will be wiped clean.

That debt forgiveness will come at some unknown public cost, which should be offset by freeing young people to take on other debt that contributes to the economy. Newly debt free former students may take on loans to purchase real estate or automobiles, for example.

Sen. Patty Murray, D-Wash., co-sponsored a better solution with Sen. Elizabeth Warren, D-Mass. Their bill would allow people to refinance their student loans, whether federal or private, at lower interest rates.

The Murray-Warren bill would have applied to everyone with student debt, about 25 million Americans, encapsulating another $100 billion in outstanding private loans not federally guaranteed. But it called for a small new tax on the wealthiest Americans to offset the interest loss, so it had little of hope of getting 60 votes in the U.S. Senate, let alone pass the Republican-controlled House.

But neither gets to the underlying causes of escalating student debt: the shifting of higher education costs from the public to students and their families.

The state of Washington used to fund 80 percent of the cost of a higher education, now it pays less than 30 percent. Nationwide, the average tuition has tripled in three decades for most four-year public colleges.

With years of double-digit tuition increases and family income stagnant since 2008, students have had to borrow more for their education.

We could reduce educational borrowing if state governments returned their investments in higher education to pre-recession levels, or made more money available to middle- and low-income students through grants and scholarships.

But the chances of that happening are slim given the enormous ideological divide that afflicts both Congress and the state Legislature. So, Obama did the best he could to help those trying to make a better life for themselves.