Republicans have the
wrong approach, he says
Statement received from the White House moments ago. © SGE, Inc.
IN A STATEMENT from the White House released just moments ago, President Obama has made it clear that the Republican-introduced bill on student loan interest rates under debate in the House of Representatives, is unacceptable.
“If the President were presented with this legislation in its current form, his senior advisors would recommend that he veto the bill,” says the Statement of Administration Policy that just landed in my inbox from the Executive Office of the President.
The statement continues: “On July l, absent Congressional action, the interest rate on new subsidized Federal Direct Stafford Loans for undergraduate students will double, from 3.4 percent to 6.8 percent.”
A PROPOSAL now being talked about in the House – H.R. 1911: Smarter Solutions for Students Act (Rep. Kline, R-Minnesota, and 5 cosponsors) – may very well pass.
A far better proposal was introduced in the U.S. Senate by freshman Sen. Elizabeth Warren of Massachusetts on May 8. I blogged about her bill on May 16 in a post titled “Elizabeth Warren introduces bill to stave off financial ruin for many”
Sen. Elizabeth Warren promotes he own solution on her official United States Senate web page.
Warren’s “Bank on Student Loans Fairness Act” would dramatically lower the interest rate on student loans for one year while a permanent solution could be found.
The Republicans’ House bill on the other hand, could result in permanently higher interest rates for millions of student borrowers.
The White House statement notes that the seven million students “who rely on these loans to finance postsecondary education should not be burdened with additional college debt as they seek to graduate, launch a career or a business, start a family, or buy a house.”
I could not agree more strongly.
The president has proposed his own plan in the FY 2014 Federal budget.
“Under the President’s proposal, the rate on new Federal student loans would be set each year based on the Treasury’s actual cost of borrowing, and would remain fixed for the life of the loan so that borrowers would have certainty about the rates they would pay.”
And then comes the punchline: “While the Administration welcomes action by the House on this issue, H.R. 1911 is the wrong approach.”
After a detailed counterargument, the statement concludes:
“… [T]he Administration believes that student loan interest rates should not be raised to reduce the deficit.”
Thank you President Obama. Take that John Boehner.