Obama pushes for lower loan rates
Published: Tuesday, April 24, 2012
Updated: Tuesday, April 24, 2012 01:04
President Barack Obama will visit universities across the country today to push for lower student loan interest rates as part of his promise for a more accessible education, which he proposed earlier this year in his State of the Union address.
More than 7 million students with federal loans will see their interest rates double beginning July 1 unless congress intervenes, said White House Spokesman Matt Lehrich in a conference call with The Daily Athenaeum Monday.
"For average students with these loans, this could mean an additional $1,000 in debt. At a time when college has never been more essential, it’s also never been more expensive," Lehrich said. "Families and students are struggling to meet these costs, and there’s no reason why we should add to their burden."
The new policy will increase the interest rate of subsidized loans for undergraduates from 3.4 percent to 6.8 percent, and it will no longer offer subsidized loans to graduate students.
The current six-month grace period that allows students to postpone their payments will also be diminished as part of the new policy.
While nearly 5,000 West Virginia University students are avoiding tuition fees with the Promise Scholarship, more than half of the student body currently depends on loans, according to Kaye Widney, director of Financial Aid and Scholarships for WVU.
"Average indebtedness of last year’s graduating class was $21,200," Widney said. "There are a number of changes effective July 1 that will impact our students, and the increase in the interest rate on subsidized loans will impact borrowers after they leave school."
Cecilia Munoz, assistant to the president and director of the Domestic Policy Council, said Obama’s push for lower college costs is just an extension of his vision for "an economy built to last."
"The strength of our economy in this country is inextricably linked to the strength of our education system, particularly in times of economic challenge like today," Munoz said. "This really ties back to the themes the president has been talking about since his State of the Union address and even before. President Obama laid out a blueprint for an economy built to last – an economy built on American manufacturing, American energy, skills for the American workforce and a renewal of American values."
In 2010, students who took out loans left college owing an average of $25,000, and Munoz said Obama believes it’s crucial to recognize the hard work of college graduates and "do more than ever before" to address the issues of cost.
"At a time when Americans owe more on student loans than we do on credit cards, President Obama believes we must reward hard work and respond by keeping interest rates low, so that more people get a fair shot at an affordable college education – the skills they need to find a good job and a clear path to the middle class," she said. "We are home to the best colleges and universities in the world, yet tuition and fees measured in constant dollars have more than doubled over the past two decades."
As a land-grant school, it’s important for universities like WVU to honor the Morrill Act by embracing the opportunities of an affordable education, Widney said.
The act was passed by Abraham Lincoln in 1862 and allowed the federal government to provide 150,000 acres to establish WVU in 1867.
"This year marked the 150th anniversary of the Morrill Act. We have an opportunity to honor Lincoln’s vision and secure our economic future by working together to ensure that college remains affordable for all Americans," she said.
Widney said while the economy is suffering, the Obama administration has already made strides for graduates entering the real world.
"With the support of congress, we have doubled Pell Grant funding for low income students and nearly tripled tax credits for middle class families," she said. "We have lowered the cap on student loan payments to 15 percent of income, and we are lowering it even further to 10 percent starting in 2014."
Obama will travel to college campuses in North Carolina, Colorado and Iowa today and Wednesday to speak about the issues surrounding student loans.
White House administration is also leading a social media campaign via Facebook, Twitter and Google Plus to address the issue, using the hashtag "#DontDoubleMyRate."