Obama’s Republican Student-Loan Plan

On July 1, the interest rate on new Stafford subsidized federal college loans is scheduled to double. Rather than trying to maintain the current rate, Congress should take this opportunity to restructure student aid, directing more money toward those with the greatest need.

President Barack Obama initially proposed just that. Although the current rate of 3.4 percent is set by Congress, the president called for subsidized loan rates equal to the cost of 10-year Treasury notes plus 0.93 percentage points: That would work out to a current rate of about 3 percent. For unsubsidized loans, the rate would be set to the 10-year Treasury note plus 2.93 percentage points. (Interest accrues during school for unsubsidized loans, while the government pays the interest on subsidized loans.)