By Caleb Gasteiger | Staff Writer |
The Student Loan Program that President Barack Obama pitched to young voters during his re-election is now on the table for discussion and if passed, could stop a doubling of interest rates on the July first budget.
The president will host several college students at the White House on Friday as he calls on Congress to stop the rates from doubling.
“While we welcome that House Republicans have paid some attention to this issue this year, their proposal unfortunately does not meet the test,” said White House spokesperson Jay Carney on May 22.
“It fails to lock in low rates for students while also eliminating a safeguard that provides middle-class families most in need with lower interest rates for student loans,” said Carney.
This comes as welcome news to most college students who have mounts of debt from student loans that continue to pile up throughout their student career.
With current interest rates at 3.4 percent on subsidized loans, on a $20,000 loan over a 10 year period, you will pay $3,620 in interest.
If the rates double, the amount of interest will blow up to $7,619.
CSUSB Junior Maria Lopez believes that as a college student that does not get financial aid, her only option is student loans with high interest rates.
“I try to stack up classes as much as I can because I want to get out of here as soon as possible with the least amount of money that I have to pay off,” Lopez said of her college career.
“Everyone knows class sizes are getting smaller and sections are being closed so instead of getting out of here on time or earlier, [we stay longer], which causes us to spend more money than I was planning on spending,” Lopez said.
The Associated Press (AP) on Yahoo News has said that this political issue is far more “low key” than Obama made it out to be on the campaign trail when he was attempting to attract the youth vote.
His actions this week are being compared to this time last year when he launched a full and aggressive campaign to pressure Republicans to act by giving speeches at college and high school campuses in presidential battleground states.
According to The AP, the House passed legislation, last week, which would link the rates to financial markets by pegging them to fluctuations in 10-year Treasury notes.
The White House has said that if this is the version that is placed on the president’s desk, they will veto. The Senate has yet to act on this bill.
Obama’s proposal would also link the rates to the financial markets but, unlike the Republican proposal, interest rates would be locked in for borrowers while under the Republican plan, rates would be set at a cap.
Some Democrats would prefer a two-year extension of the current rate until efforts are taken up to create a higher education bill.
Republicans believe that this is a costly and irresponsible move as the extensions would cost $9 billion, according the AP.
Brendan Buck, a spokesman for House Speaker John Boehner said, “It’s obvious that the White House would love nothing more than to change the subject from its growing list of scandals, but scheduling this PR stunt reeks of desperation.”
With July first fast approaching if no action is taken loan rates will double by said date and eventually burn holes in students’ pockets.