Preventing doubling interest rates
United States President Barack Obama held a conference call aboard Air Force One with journalists from around the country Tuesday to discuss the need for Congress to prevent student loan interest rates from doubling July 1—
which is expected to add on average around $1,000 to students’ debt.
“I’ve always believed that we should be doing everything we can to help put higher education within reach for every single American student — because the unemployment rate for Americans with at least a college degree is about half the national average,” Obama said. “And it’s never been more important. Unfortunately, it’s also never been more expensive.”
The president acknowledged that students who take out loans to pay for college graduate owing on average, $25,000.
According to Eastern Michigan University Financial Aid Director Cynthia Van Pelt, 16,600 students— including undergraduate and graduate— received federal loans for the 2011-12 academic year.
This number does not include federal Parent PLUS Loans.
Van Pelt said 22,026 students received some sort of financial assistance during this academic year. That number reflects federal, state, institutional and third party funding in the form of grants, loans, work study, assistantships, fellowships and athletic aid.
“We know what this is like, because when Michelle and I graduated from college and law school we had enormous debts, and it took us a lot of years to pay off. So that’s probably why I feel this thing so personally.
“For a lot of working families, the idea of owing that much money means higher education is simply out of reach for their children,” Obama said. “And for the first time now we’ve got Americans owing more debt on their student loans than they do on their credit cards.”
In 2011, the amount of student loans taken out last year crossed the $100 billion mark for the first time and the total amount of loans outstanding exceeded $1 trillion last October according to a report from the Federal Reserve Bank of New York.
“The key point I want to make is if Congress doesn’t act on July 1st, interest rates on Stafford loans, on student loans from the federal government will double,” Obama said. “Nearly 7.5 million students will end up owing more on their loan payments. And that would be, obviously, a tremendous blow. And it’s completely preventable.”
The president said he has implored Congress to make higher education more affordable by preventing the interest rates from doubling, extending the tuition tax credit and doubling the number of work study jobs over the next five years.
Obama said the effort has been met with intense opposition from Republicans.
“Instead, over the past few years, Republicans in Congress have voted against new ways to make college more affordable for middle-class families, even while they’re voting for huge tax cuts for millionaires and billionaires — tax cuts that, by the way, would have to be paid for by cutting things like education and job-training programs that give students new opportunities to work and succeed,” he said.
The president said the nation cutting its “way to prosperity” shouldn’t be an option.
“Making it harder for our young people to afford higher education, allowing them to earn their degrees — that’s nothing more than cutting our own future off at the knees,” he said. “And Congress has to keep interest rates on student loans from doubling, and they need to do it now.”
The president said this issue has become a question of values.
“We can’t let America become a country where a shrinking number of people are doing really well, a growing number of people struggle to get by, and you’ve got fewer ladders for people to climb into the middle class and to get opportunity,” he said.
“We’ve got to build an economy where everybody is getting a fair shot, everybody is doing their fair share, everybody is playing by the same set of rules. That’s ultimately how the middle class gets stronger. And that’s an economy that’s built to last.”