In a little more than a week, interest rates on many new federal student loans are set to double. If Congress fails to act, seven million students will pay about $1,000 more in interest on next year's loans. That means that college will be put further out of reach for millions of students and middle-class families. Now is not the time to make school more expensive for our young people.
Last July, President Obama worked with lawmakers to keep student loan interest rates from doubling to 6.8 percent. If Congress continues to do nothing, the interest rate on new subsidized student loans is scheduled to go up again on July 1. The president's goal remains the same: keep college within reach for middle-class students and families.
The House Republicans have also put forward a plan, but it fails the basic test of helping to make college affordable. It fails to lock in low rates for students and instead uses higher interest payments to pay for deficit reduction. Republicans would rather reduce the federal deficit on the backs of students than take a balanced approach, closing wasteful tax loopholes or raising taxes on the wealthiest Americans.
The president and the Democratic party have a different plan. The president favors a long-term solution that would cut rates this year on nearly all new loans, ensure that all students have access to affordable repayment options, and that does not charge students higher interest rates to pay for deficit reduction.
As our economy continues to recover, the seven million students who rely on these loans to finance their education shouldn't face higher debt as they graduate, start a career or buy a house at a time when interest rates are at historic lows.
The president remains focused on growing our economy from the middle out, not the top down. A college degree is an investment in the future of our students and our country. It's a good investment and Republicans in Congress should not be standing in the way of young people trying to afford a college education that will help them achieve their American Dream.
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About Debbie Wasserman Schultz Chair of the Democratic National Committee
Jay Schalin Higher Education Writer at the John William Pope Center for Higher Education Policy