Think back to when President Obama was just getting started in the White House, riding a wave of optimism and primed to advance a broad domestic agenda. Mortgage assistance for underwater homeowners! The world’s highest proportion of college graduates by 2020! Healthcare for everybody!
In his first 18 months, the president enacted several policies designed to move the country in that general direction…to varying degrees of success. Over the past few weeks, however, the Obama administration has revisited those 2009 and 2010 plans with a series of upgrades. Here’s a look at how they’re holding up now.
New Rules for Mortgages
Launched in March 2009 as a response to the foreclosure crisis, the Home Affordable Modification Program (HAMP) offered lenders incentives to help distressed families keep their homes. Three to four million families were expected to modify their loans under the program, while unemployed borrowers were eligible for up to six months’ forbearance on their mortgage payments as they looked for work. Yet with still-rising unemployment — and with 45 percent of the unemployed remaining jobless well past six months — many can't keep their heads above water as foreclosures continue to surge.
On July 7, the Obama administration announced additional mortgage relief for the unemployed. Servicers will now be required to double the forbearance period for homeowners with Federal Housing Administration-insured loans (which account for a quarter of all new loans) to 12 months. And all servicers participating in the HAMP program must set forbearance at a minimum of 12 months.
“While there’s no doubt that HAMP has reached fewer people than we’d initially hoped, it has helped more than 730,000 families permanently modify their mortgages, and tens of thousands more families get modifications each month,” Housing and Urban Development Secretary Shaun Donovan told reporters in a conference call. With unemployment now being the biggest driver of foreclosure, HUD’s forbearance extension specifically targets the jobless. “These adjustments will provide more opportunities for unemployed borrowers to stay in their homes while they look for a job.”
Debby Goldberg, special project director for the National Fair Housing Alliance, thinks the tweaks are a significant step forward. “When the average unemployed worker is out of work for 9 months and counting, a three or four month forbearance period isn’t really enough to get people over that hump,” she told The Root. “Extending it to a year is a major step to help people hold on to what is, for most of us who are lucky enough to own a home, our major financial asset. And it’s in everyone’s interest to help unemployed folks hold onto it, to promote longer-term economic stability for the country as a whole”
College Tuition “Hall of Shame”
Early on, Obama proclaimed that by 2020, the United States would once again lead the world in its percentage of college graduates (we’re currently trailing at Number 12). His efforts to make higher education more accessible have included a near doubling of Pell Grants for low-income college students, more funding for community colleges, and cutting out banks as middle men in the federal student loan program to provide more aid to students directly.
On June 30, the Obama administration launched a new online tool to help students in a more roundabout way – publicly shaming the country’s most expensive schools. The Department of Education’s new online College Affordability and Transparency Center lists the institutions with the highest tuition prices, highest net prices, and those with the fastest-rising prices. Schools with steep tuition hikes will have to report why costs have gone up, which the Department will summarize for parents and students.
“We hope this information will encourage schools to continue their efforts to make the costs of college more transparent so students make informed decisions and aren’t saddled with unmanageable debt,” said Education Secretary Arne Duncan in a news release.
Cassius Johnson, associate vice president for national federal policy with Jobs for the Future, agrees that publishing these numbers is an important role for the federal government to play. “If you look at what’s available to students right know, particularly low-income students, in terms of knowing what their price options are, there’s not a lot of transparency in the market. When you go to Wal-Mart you’re able to see what prices are for a particular item, but there’s been nothing like that for colleges,” he told The Root.
“It’s hard to predict whether this will actually drive down costs. But hopefully by having some transparency and exposure around how colleges make increases, it will create an incentive for institutions of higher education to look for other ways to contain costs besides just increasing tuition and passing the burden onto the students. … I’m sympathetic to the institutions, but they’ve got a lot more advocates on their side than the low-income population around this very serious problem of getting access to post-secondary opportunities.”
Health Insurance Premium Adjustments
When President Obama signed the Affordable Care Act (ACA) into law in March 2010, it put into gear a range of changes to the health care system that won’t be fully implemented until 2014. But piece by piece, various parts of the law have already kicked in, including allowing young adults to stay on their parents’ policies until age 26 and banning insurance companies from denying coverage to children with pre-existing conditions.
On July 1, another ACA provision went into effect, allowing better access to coverage for adults with pre-existing conditions. Under the Pre-existing Condition Insurance Plan (PCIP) – a temporary plan to cover sick adults until 2014, when they transition to state-run insurance exchanges –they may now be eligible for reduced premiums, if they live in the 23 states (and D.C.) where the federal government administers the plans. The programs are run at the state level in the rest of the country.
Six states– Alabama, Arizona, Delaware, Florida, Kentucky, and Virginia – saw their PCIP premiums reduced by 40 percent. Mississippi, on the other hand, only saw a premium reduction of 2 percent, with most of others falling in the 15 to 25 percent range. “The Pre-existing Condition Insurance Plan changes lives, and in many cases, literally saves lives,” said Health and Human Services Secretary Kathleen Sebelius in a release. “These changes will decrease costs and help insure more Americans.”
Nicole Dozier, assistant director of the North Carolina Justice Center’s Health Access Coalition, has mixed feelings about the effectiveness of PCIP. “It’s a temporary solution, helping thousands of people, and we’re thankful for that,” she told The Root. “But I worry that it’s not a solution for other folks who still find the premiums unaffordable. Although they’re lower than what they would get in the private market, I often talk to people with pre-existing conditions who are just waiting for their premiums to come down a little bit more. So while the program is great for some, we’re going to keep working to make it better for everyone.”