President Barack Obama on Friday urged Congress to prevent an increase in student loan rates, saying rising college costs hold back the entire middle class and unfairly saddle young people with more debt just as they are starting out in their adult lives.
Interest rates on new subsidized Stafford loans are set to double, from 3.4 percent to 6.8 percent, on July 1. Lawmakers from both parties say they want to avoid the increase but are divided over how to act.
Obama made his case flanked by college students dressed in business suits and dresses during remarks in the Rose Garden on a steamy Washington morning. The event marked the beginning of a public campaign by the president to temporarily extend current student loan rates or find a long-term compromise to avoid the July 1 rate increase.
"We know that the surest path to the middle class is some form of higher education," Obama said. He said Americans now owe more on student loans than on credit cards. He said he and his wife just finally paid off their loans in the last decade and paid more on them than they did on their mortgage.
"We were lucky. We had more resources than many," Obama said. He said the debt is forcing some young people to delay buying cars and houses, which can hurt the economy overall.
The White House has proposed linking federal student loan rates to the financial markets. The Republican-controlled House passed a plan last week that would reset student loan rates every year according to financial markets, but Obama has threatened to veto the bill because it doesn't lock in rates.
"The house bill isn't smart, and it's not fair," Obama argued.
Senate Republican Leader Mitch McConnell characterized Obama's comments as a "campaign-style" event at the White House since House Republicans have already passed legislation that would prevent a rate hike.
"Here’s one issue where the two parties can and should find quick agreement," McConnell said. "Unfortunately, the President appears more interested in needlessly stoking partisan divisions in Washington than helping young Americans avoid a higher interest rate on their student loans.”
Based on reporting by the Associated Press.