Obama and Duncan Begin Push to Avoid Doubling of Student-Loan Interest Rate - Government - the Chronicle of Higher Education
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.