President Obama and Secretary of Education Arne Duncan are ramping up efforts to build public support for a way to prevent the interest rate on some student loans from doubling in July.
The interest rate on subsidized Stafford loans is set to double, from 3.4 percent to 6.8 percent, on July 1. The change would affect more than seven million student-loan borrowers, who would incur an extra $1,000 in annual interest charges for each loan, according to Mr. Duncan.
After visiting colleges in Wisconsin and Iowa on Thursday, Mr. Duncan spoke at a White House briefing on Friday to promote the seemingly quixotic task of persuading Republicans in Congress to preserve the lower interest rate.
"At a time when college has never been more important, it also, unfortunately, has never been more expensive," he said at the briefing. "Our administration is doing more than ever before to address it."
For his part, the president will make stops next week at flagship public universities in Colorado, Iowa, and North Carolina—which also happen to be swing states in the presidential election—to press this issue and promote his overall higher-education agenda. Mr. Obama will speak at the Universities of Colorado at Boulder, Iowa, and North Carolina at Chapel Hill. He will preview his remarks in his regular Saturday radio address. The White House also has rolled out a social-media campaign using the hashtag #DontDoubleMyRate.
The interest-rate problem stems from 2007, when Congress voted with bipartisan support to cut the Stafford interest rate in half by 2011, from 6.8 percent to 3.4 percent. The cut cost an estimated $7.2-billion from 2007 to 2012, a total that was absorbed almost entirely by lenders and loan-guarantee agencies, according to the Congressional Budget Office.
But in the years since then, student-loan debt has burgeoned, surpassing the $1-trillion mark and exceeding the nation's total credit-card debt for the first time. Student debt has also grown as an issue, gaining power as college costs have continued to rise and a sluggish economy has failed to produce jobs for many college graduates. The issue has been particularly potent among young people, and is a key concern of the Occupy protesters. In March college students delivered 130,000 letters to Congressional leaders to protest the expiration of the lower interest rate.
Bills introduced in both chambers in January aim to extend the 2007 measure for one more year, but they are unlikely to gain traction in Congress. The bills (HR 3826 and S 2051) were introduced by Rep. Joe Courtney, a Democrat of Connecticut, and Sen. Jack Reed, a Democrat of Rhode Island. The Congressional Budget Office estimates that the bills would cost $6.7-billion.
Though the Republican-controlled House of Representatives is unlikely to support the bill, Mr. Duncan said the administration would continue to negotiate on Capitol Hill in an attempt to pass it by July.
"We need to fix it now, we have an immediate crisis," he said at the White House briefing. "I could care less about politics and ideology. This is about, We need an educated work force."
Republican lawmakers have called the proposal a temporary solution, and have said the responsibility to keep tuition affordable should fall to colleges, not the federal government. Rep. John Kline, a Republican of Minnesota and chairman of the House Committee on Education and the Workforce, said extending the low interest rates would unfairly burden taxpayers.
"I have serious concerns about any proposal that simply kicks the can down the road and creates more uncertainty in the long run—which is what put us in this situation in the first place," he said in a news release. "My colleagues and I are exploring options in hopes of finding a responsible solution that serves borrowers and taxpayers equally well."