The Obama White House has announced two new plans to help struggling Americans better manage their debt burdens. Both measures are targeted at debts that even filing personal bankruptcy cannot always eliminate, student loans and mortgages. Here’s a look at what the debt relief programs are designed to do and how they might help you.

Mortgage Relief: The New HARP

On the mortgage side of things, the Obama Administration recently rolled out revisions to its Home Affordable Refinance Program (HARP). At present, the program provides a pathway to mortgage refinancing for those who are underwater on their mortgage loans and have loans backed by Fannie Mae or Freddie Mac.

The changes will:

• Add protections for lenders who agree to refinance. At present, the main problem with implementing HARP has apparently been getting lenders to agree to refinance mortgages. The new version will add more protections for these lenders so they’re more likely to actually offer modified mortgage loan terms to needy borrowers.
• Expand those eligible to participate. When the new changes go into effect, any homeowner who is underwater on a federally backed loan, is current on payments, and has no late payments in the recent past will be eligible for HARP help.
• NOT help those who are delinquent on their mortgages. While mortgage delinquency numbers have been reportedly creeping downward in recent months, fully 3.9 percent of borrowers are currently 90 days or more late on their mortgage payments, and another two million are in some stage of the foreclosure process. The HARP revisions will not help these groups.
• NOT help those with private mortgages. Homeowners whose mortgages are backed by an institution other than Fannie Mae or Freddie Mac are also ineligible for the HARP protections.

Student Loan Relief: Pay as You Earn

On the student loan side of things, the White House has offered an updated alternative to the current Income Based Repayment (IBR) option. When the new rules take effect, students with educational debt enrolled in Pay as You Earn will be required to pay no more than 10 percent of their monthly income in student loans.

Further, the new program will forgive federal student loans after 10 years of working in the public sector and after 20 years in certain other jobs. Certain student borrowers who are unemployed may be excused from making payments until they find work.

The Pay as You Earn program will not offer relief to:

• Those with privately funded student loans. Only federally backed loans qualify for this particular program.
• Those who are currently late on loan payments. As with IBR, Pay as You Go requires loan holders to be current on payments in order to enroll.

The number of graduates defaulting on their loans within a year of earning their degree rose from seven percent between 2008 to 2009 to 8.8 percent between 2009 to 2010.