Obama, GOP clash over student loans
01 Jun 2013 12:25 AM UTC
Washington (CNN) -- If at first you succeed, then by all means, try, try again.
President Barack Obama returned to a successful strategy from last year's election campaign by calling Friday for college students and their families to mount pressure on congressional Republicans to prevent a jump in some student loan rates set to occur on July 1.
"Higher education cannot be a luxury for a privileged few," he said at the White House with college students standing behind him. "It is an economic necessity that every family should be able to afford, every young person with dreams and ambitions should be able to access and now's not the time for us to turn back on young people."
The Rose Garden appearance angered GOP leaders, who contend they have proposed a reasonable solution.
"No one should be fooled by today's campaign-style event at the White House," said a statement by Senate GOP leader Mitch McConnell of Kentucky.
He added that Obama "appears more interested in needlessly stoking partisan divisions in Washington than helping young Americans avoid a higher interest rate on their student loans."
The issue is both practical and political.
If Congress doesn't act in coming weeks, interest rates on government-subsidized Stafford loans for college students will double from the current 3.4% to 6.8% starting in July.
Only students taking out new subsidized loans after July 1 would be affected, as those getting unsubsidized loans already pay the 6.8% rate.
About 7 million students, a third of the total taking out loans, would be affected.
Obama said Friday the impact would mean those students needing subsidized loans would have to pay about $1,000 more a year.
When he asked how many in the crowd could afford that, several heads shook "no." To qualify for subsidized Stafford loans, students must meet an income threshold.
The event allowed Obama to revert to a topic he benefited from in his successful re-election campaign last year, and to divert attention from controversies dogging his administration early in his second term such as IRS targeting of conservative groups and secret subpoenas of journalists' phone records.
Republicans argue that Obama basically agrees with their approach, which would tie the student loan rate to economic factors instead of leaving it up to Congress. However, the two sides remain at odds over specifics including how fast and high the interest rates could rise.
A measure recently passed by House Republicans would mean that the rate for all new student loans would be about 5% for the first year, but would likely rise in the future because it would be linked to the rate on 10-year Treasury bonds, which currently are low.
Obama's budget proposal for next fiscal year would hold down rates for subsidized loans to about 3% in the first year, with other students paying about 5%. Those rates also would be linked to the 10-year Treasury bond levels and therefore would likely increase in future years.