Obama, Romney Agree on Extending Student Loan Interest Rate Cut

Without legislation, Stafford interest rates will double to 6.8 percent on July 1.

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Finally, some bipartisanship.

Over the next two days, President Obama is set to visit the University of North Carolina at Chapel Hill and the University of Colorado at Boulder, pitching an idea that even his presumptive Republican presidential challenger Mitt Romney agrees with: Cuts to federal student loan interest rates cannot be allowed to expire on their July 1 deadline.

If legislators do not listen to the suggestion of their presidential hopefuls, federal Direct Stafford Loan interest rates will automatically double from 3.4 percent to 6.8 percent on July 1. Obama argues that allowing these rates to double would be a tremendous blow to people seeking higher education.

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A rate jump would seemingly compound problems for the younger portion of the nation's population. The Associated Press reported Monday that in 2011, 53.6 percent of people under the age of 25 who hold bachelor's degrees were jobless or underemployed. It's the highest such rate in 11 years, and it corresponds with a consistent slide in median wages for college graduates since 2000.

Combine these statistics with the fact that total student loan debt is currently approaching $1 trillion and a bleak picture emerges: Young people owe a ton of money but can't find a job to pay it back.

While the latest issue of Stafford interest rates will not on its own solve the student loan debt crisis or help anyone find a job, inaction poses a potentially serious problem to the next batch of employment-seeking college graduates, as it will further burden them with debt.

In Congress, Democratic Reps. Gary Peters of Michigan and Joe Courtney of Connecticut have introduced legislation to keep the Stafford interest rate at 3.4 percent. In a letter circulated around Capitol Hill last week and obtained by The Huffington Post, the congressmen write, "When Treasury bonds are being sold at 2 percent and mortgage rates can be had for less than 4 percent, it is outrageous to make college students pay two to three times the going interest rate. As parents and grandparents, it is unconscionable that we would even consider putting this burden on our children."

Extending the cuts to Stafford interest rates for one year will cost the government an estimated $6 billion. Some argue that even if they were allowed to double to 6.8 percent, the interest rate would be less than some private student loans. Minnesota Rep. John Kline's office issued a statement on the topic Monday, ostensibly blaming the Obama administration for the current situation.

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"Bad policy based on lofty campaign promises has put us in an untenable situation," Kline said. "We must now choose between allowing interest rates to rise or piling billions of dollars on the backs of taxpayers."

Freezing the Stafford interest rate would be a popular move with young voters, a group that will be coveted in the upcoming election, and the one that most overwhelmingly voted for Barack Obama in 2008. The issue presents Mitt Romney and the rest of the Republican party with a politically sticky situation, as they could use some youth support, but must abstain from big government spending to stay popular with the party base.

While Romney supported extending the cuts Monday, in March he expressed the contrary, saying, "It would be popular for me to stand up and say, 'I'm going to give you government money to pay for your college,' but I'm not going to promise that."

The House bill to extend the Stafford cuts currently has 126 co-sponsors, all of them Democrats.

Brian Greene writes about politics for U.S. News & World Report. You can contact him at bgreene@usnews.com.