With interest rates on new subsidized loans set to double in just a few weeks, President Obama is getting more vocal about his desire for Congress to put the kibosh on the rate hike. To try and increase visibility around this issue, POTUS invited a handful of college students, graduates and members of the press to the White House Rose Garden this past Friday morning.
Addressing the small crowd, the President said “This [college affordability] isn’t just critical for their futures but it’s also critical for America’s future.”
Obama continued saying,
“There are three questions we have to ask ourselves as a nation.Number one: How do we make America a magnet for good jobs in this competitive 21st century economy? Number two: How do we make sure that our workers earn the skills and education they need to do those jobs? And number three: How do we make sure those jobs actually pay a decent wage or salary so these people can save for retirement, send their kids to college?”
POTUS then targeted the rest of his speech on question two. He spoke that the sure path to middle class is with a higher education and that it’s a good investment for their futures and for America’s future. Obama said, “But like a lot of young people all across the county, these students have had to take on more and more and more debt to pay for this investment.”
He cited average student loan debt at graduation at more than $26,000 and asked the assembled students if they were on track for that level of the debt and most raised their hands. Obama went on to say his and Michelle’s student loans cost more than their mortgage and they were only paid off nine years ago.
All of this sounds good. The one mention I would differ with is when the President said he and Congress have “reformed the student loan system.” True, some ills have been addressed, but overall the problem with these programs is that they aren’t open to all borrowers. Some are only good for loans taken out after a certain date and private student loans are still a plague. And even putting a stop to the doubling of rates will only impact new loans and not the trillion dollars of loans with one-third growing more delinquent by the day.
Obama reminded the crowd that they were in this same spot last year when rates were about to double then. He mentioned the student loan bill passed in the House, but said the legislation fails to lock in lower rates for students next year. The bill in question is HR 1911 “Smarter Solutions for Students Act” that proposes tying new loans to Treasury note rates, but Obama clearly doesn’t like the bill saying, “The House bill isn’t smart and it’s not fair…They didn’t do it the right way.”
He encouraged everyone to call, email or tweet their Representative to tell them to stop raising student loans. “Now is the time to reaffirm our commitment to you and the generation that’s coming behind you.” We agree that the rates on student loans don’t need to double – whatever plan is adopted to forestall this, whether it’s HR 1911 or a simple extension of the lower 3.4% rate, is better than the rate doubling.
But as soon as this hurdle is cleared, the spotlight on student loans doesn’t need to dim, but needs to refocus on the larger issue of oppressive debt that is plaguing many borrowers ineligible for Obama’s reform repayment plan because their debts pre-date 2007. If you owe student debts, check out Tuition.io’s student loan management tool to get a grip on your debt. And also enjoy these other related blogs on student loan interest rates, reform and proposed legislation: