President Barack Obama on Friday is publicly calling on Congress to prevent Stafford student loan interest rates from doubling this summer after pledging on the 2012 campaign trail to keep it from going into effect.
In a Rose Garden speech surrounded by college students, the president is pressuring Congress to pass an extension to keep rates on subsidized student loans from doubling from 3.4 percent to 6.8 percent. Stafford loans, which are offered to low- and middle-income students, are currently at 3.4 percent. Congress passed an extension of that rate last year, but it's set to expire July 1.
Obama had warned on the 2012 campaign trail that allowing the rate to double would cost the average student borrower $1,000 for each year of college over the life of their loan?a weighty price to pay for recent graduates and families considering whether they can afford the expense of college in a tough economic climate. Obama pledged to prevent that from happening this year.
[Read more Yahoo News coverage of the student loan debate here.]
Rep. John Kline (R-MN), chairman of the House Committee on Education and the Workforce, has offered a plan that ties rates on student loans to the interest on the 10-year Treasury rate. But the White House and many Democrats take issue with that plan because interest rates would change annually.
"While the Administration welcomed action by the House on interest rates, it unfortunately moves us in the wrong direction," the White House stated in a fact sheet released ahead of Friday's event.
Several Democrats have offered their own plans in Congress, as has the president.
Obama outlined his proposal in his budget this year. It calls for tying rates on student loans to the interest on a 10-year Treasury note. Unlike Kline's proposal, the president's plan locks in those rates for the life of the loan.
Some student loan advocates criticize the president's proposal because it doesn't provide a cap on those rates?something included in Kline's plan.
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