President Barack Obama surrounded himself with college students to urge Congress to pass his legislation to prevent an automatic doubling of student loan interest rates to 6.8 percent on July 1.
“Higher education cannot be a luxury for a privileged few,” the president said today at the White House. “It’s an economic necessity that every family should be able to afford.”
An election-year deal last year froze rates at 3.4 percent for one year on subsidized Stafford loans, which are available to low-income students. That agreement expires in a month.
The Republican-controlled House voted 221-198 on May 23 to reset interest rates on federal student loans, linking them to yields on the 10-year Treasury note, with the maximum capped to prevent large swings.
The Senate, where Democrats have a majority, hasn’t acted.
The administration says it opposes the House measure, because it fails to lock in lower rates. Obama proposed a plan in his 2014 budget that would freeze rates again this year, and guarantee those rates over the life of the loan. In the future, he would set a fixed rate, in line with the government’s borrowing costs.
“The House bill isn’t smart, and it’s not fair,” Obama said.
A freshman who borrows $27,000 over the next four years, a typical debt for a college graduate, would pay an extra $4,000 in interest payments without Obama’s plan, the White House said in a statement.
Republicans called Obama’s event a political stunt.
“House Republicans have already passed legislation that would prevent a rate hike, and Senate Republicans have proposed a solution similar to one the president himself called for in this year’s budget,” Senate Republican Leader Mitch McConnell of Kentucky said in a statement. “No one should be fooled by today’s campaign-style event.”
Minnesota Republican Representative John Kline, sponsor of the House measure, said in a May 23 interview that “Senate Democrats and some Democrats in the House are calling to kick the can down the road for two years so Congress can get together again and have a big political fight.”
In addition to subsidized Stafford loans, on which interest doesn’t accrue until after a student graduates, the House measure would affect rates for unsubsidized Stafford loans, which are available regardless of financial need, and Plus loans, which are available to graduate students and parents of undergraduates.
The current rate for unsubsidized Stafford loans is 6.8 percent; for Plus loans, the rate is 7.9 percent.