Photo by Brendan Smialowski/AFP/GettyImages.
President Obama will go on the road next week to a trio of swing states as part of his effort to convince lawmakers to prevent federal student loan interest rates from doubling this summer to 6.8 percent.
The White House announced Friday that the president will make stops in North Carolina, Colorado and Iowa—three states expected to play a major role in November's election—to make the case for Congress to take action. In a statement outlining the his case, the White House argued that the rate change would impact an estimated 7.4 million students, who on average would face an additional $1,000 in debt per year at the higher rate.
As the New York Times explains, the rate hike would affect new subsidized Stafford loans. The current rate for the subsidized loans was established in 2007 College Cost Reduction and Access Act, which cut the interest rate from 6.8 percent to 3.4 for four years. Obama and his like-minded allies want to extend the low rate, especially as Americans now owe more on student loan debt than they do on credit card debt.
The affected loans apply to undergraduate students only. Grad students, as part of the debt deal Congress passed last summer, will lose access to subsidized loans starting on July 1, saving Americans (you know, aside from grad students) an estimated $21.6 billion over the next ten years. Roughly $17 billion of those savings will go to funding Pell Grants for poor undergraduate students, and the rest to reducing the deficit.
The White House likely hopes the campaign to keep the low interest rates low will help score a few political points along the way as well. The push will be in stark contrast with a statement made earlier this week by Republican Rep. Virginia Foxx, the chairwoman the Subcommittee for Higher Education.
As the Hill remind us, Foxx said she had "very little tolerance for people who tell me that they graduate with $200,000 of debt or even $80,000 of debt because there's no reason for that." Relying on her personal experience as a student in the 1960's, Foxx said she "never borrowed a dime of money" as she worked her way through school over seven years.
As the Quick and the Ed explains, however, Foxx's experience might not be useful in comparison to today's students. In-state tuition at UNC, her alma mater, has tripled since her time at the school, even after factoring in inflation, with costs increasing year-to-year at a much faster rate than they did in her time.