President Barack Obama will seek to obtain a one-year extension on the current interest rate on federal student loans in Congress before the rates double to 6.8 percent July 1.
The increased interest rates could have dramatic effects on financial aid and students’ ability to repay their tuition.
“I’ve always believed that we should be doing everything we can to put our education in reach for every American student,” Obama said in a conference call to student journalists. “In America, higher education can’t be a luxury. It’s an economic imperative that every family [must] be able to afford.”
It is necessary for Congress to extend the current interest rates on student loans because higher education must continue to be within the economic means of every American, Obama said.
Cecilia Muñoz, an assistant to the president and director of the White House Domestic Policy Council, said in a press conference that extending the current interest rate on student loans would be helpful in maintaining high levels of employment and income within the nation.
“We know that students who complete a college education earn twice that of what people who don’t have a college education earn,” Muñoz said. “Ultimately, the best way to grow the economy, make sure we have the best prepared workers to compete in the global economy and to make sure that a college education is affordable is to ensure the student loan rate doesn’t double this July.”
Muñoz also said the one-year extension would only be a short-term solution and Congress would need to pass additional legislation in the future to ensure students pay low interest rates on their student loans.
“In the Congress, in the short-term, we want a one-year stop gap effort, but we intend to use that year — assuming we are successful — to make sure we have a robust conversation about higher education in the Congress that includes keeping interest rates low,” Muñoz said.
Roberto Rodríguez, special assistant to the president for education policy, said the Obama administration has created other new pieces of legislation to assist students in financing higher education.
“Last fall, the president announced an expansion on the income-based repayment program,” Rodríguez said. “This option will enable students to cap their student monthly payments on their loans to 10 percent of their monthly income, and students that work and maintain those repayments after 20 years would have that loans’ debt forgiven.”
Alex Kludjian, public relations director of USC College Republicans, said even though this move might be popular among students who receive federal student loans, it could also be fiscally irresponsible.
“You can’t just get money from the government and then not pay it back without there being some fiscal impact,” Kludjian said. “Students would obviously welcome this decision, but [one must] ask if this is actually fiscally responsible.”