[youtube http://www.youtube.com/watch?v=_TcVs9wnZlo&w=560&h=315]
President Obama sees the coming lapse of a 2007 law that would end an increased subsidy that keeps the interest rate on Stafford Loans at between 3-4 percent as an opportunity to portray Republicans as opponents of higher education.
The Democrats passed the law shortly after taking control of Congress and made the reduction temporary, and after July 1 the rate will revert back to 6.8 percent unless Congress acts.
The White House began pushing the looming interest-rate hike as a wedge issue Friday when Secretary of Education Arne Duncan appeared at his daily press briefing noting that the president plans to visit colleges across the country next week to push for an extension.
Obama followed up Saturday by making the issue a central part of his weekly address.
“If Congress doesn’t act, on July 1 interest rates on some student loans will double,” Obama said. “Nearly seven and a half million students will end up owing more on the loan payments.”
Republicans argue that keeping the College Cost Reduction and Access Act in place costs too much, noting that the Congressional Budget Office estimates that extending the subsidy would cost $6 billion for one year.
“Bad policy based on lofty campaign promises has put us in an untenable situation. We must now choose between allowing interest rates to rise or piling billions of dollars on the backs of taxpayers,” Rep. John Kline, R-Wisc., chairman of the House Committee on Education and the Workforce said in a statement Friday. “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. My colleagues and I are exploring options in hopes of finding a responsible solution that serves borrowers and taxpayers equally well.”
Cato Institute experts Neal McCluskey and Chris Edwards contend these student loan subsidies only serve to fuel the hyperinflation of college costs.
