Two Parties Find a Way to Agree, and Disagree, on Student Loan Rates

Ann McClure's picture

As President Obama wrapped up a barnstorming tour of college campuses in swing states on Wednesday, Democrats and Republicans agreed that they wanted to avoid a steep increase in the student loan interest rate this summer. But the chief issue remained unsettled: how to pay the cost of doing so.

In a second day of campaign-style rallies, Mr. Obama pressed his attack on Republicans, depicting them as unsympathetic to college students in need. Republicans countered by accusing the president and his Democratic allies of playing politics with the issue and trying to raise taxes on small businesses to pay for the subsidized rate.

Caught in the middle were seven million college students who will see the interest rate on their federally subsidized loans double to 6.8 percent on July 1 unless Congress and the White House come together on a plan to prevent that, at a cost of $6 billion. For a typical student, the White House said the higher rate could mean as much as $1,000 in additional debt per year at a time of high unemployment among recent graduates.

Mr. Obama has made the issue his top talking point in recent days as part of an effort to put Republicans on the defensive and duplicate the political success of the payroll tax cut extension last winter. Speaking at the University of Iowa here, he seized on a comment by an aide to Speaker John A. Boehner that the president should focus on fixing the economy.

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