WASHINGTON, D.C. – Casting the issue as both a matter of middle-class prosperity and national security, Vice President Joe Biden challenged young people Thursday to push Congress to act to prevent student loan interest rates from doubling this summer.
“It’s all about restoring the dream of the middle class,” Biden said at an event titled “White House Briefing on College Affordability,” held in the South Court Auditorium of the Eisenhower Executive Office Building, adjacent to the White House.
“When the middle class is doing well, the wealthy do very well, and the poor have a chance,” Biden said. “They have a ladder up. They have a vehicle.”
Biden and other administration officials urged the young people to Tweet using the #DontDoubleMyRate and to write members of Congress to express their views.
“With your help I’m confident, and I’m not being gratuitous here, we’re going to be able to keep interest rates from doubling,” Biden told the room full of dozens of young people, who ranged from college students to members and leaders of youth-serving or advocacy organizations. “Now is not the time to make it harder for students to pay for college.”
Biden said that, if Congress fails to act, more than 7 million students will see their student loan interest rates jump from 3.4 to 6.8 percent.
“That’s going to average more than $1,000 a year,” Biden said. “These guys (Republicans) don’t think a thousand bucks make a difference. It matters. It matters. I don’t know how many of you have an extra thousand bucks lying around,” the vice president said, evoking laughter in a talk in which he portrayed Republican lawmakers—whom he and other administration officials say have failed to keep the interest rates from doubling—as being divorced from the reality of the middle class and the poor.
Biden also said making college more affordable is a matter of national security. He said when people ask him what is the single most important thing the United States can do to maintain its security edge, he responds: “The answer is simple: Have the best educated population in the world. It’s in our national interest.”
Dr. Eduardo Ochoa, Assistant Secretary for Postsecondary Education at the U.S. Department of Education, said that, if interest rates on federally-subsidized loans are allowed to double, as they are set to do this summer, it will impede the Obama administration’s goal of restoring the United States to its former status as the most college-educated nation in the world by 2020.
“This will be a major setback,” Ochoa said. “In the current landscape, if the interest rate doubles, we would take a hit on our ability to move forward.”
The issue of federally subsidized student loans doubling this summer emanates from the College Cost Reduction and Access Act of 2007, which cut the rates in half over a five-year period.
Currently, the interest rates on the subsidized loans are at 3.4 percent but are set to return to 6.8 percent July 1.
So, as the “clock is ticking,” as Roberto Rodriguez, Special Assistant to the President for Education Policy, put it during the meeting, a key question is whether the Obama administration is acting out of genuine concern for students being subjected to the “doubling” of interest rates or simply using the issue to score political points.
“I think it’s a bit of both,” said Stephen Burd, Senior Policy Analyst at Education Sector, in response to an inquiry posed by Diverse.
“I do think the Obama administration is genuinely concerned about college affordability and student indebtedness,” Burd said. “At the same time, it’s an election year, so it’s not a surprise that this is political as well.”
Conservative commentators—including those with Republican ties—have been less charitable in their remarks about the administration’s campaign to stop subsidized student loans from doubling, which has included official speeches at college campuses across the nation and even an occasion where President Obama “slow jammed the news” during a taping of Late Night With Jimmy Fallon on the campus of the University of North Carolina at Chapel Hill.
“The argument proffered for keeping the rates at 3.4 percent is that interest rates generally are at historic lows, and 6.8 percent would simply be too high,” said Neal McCluskey, Associate Director at the Cato Institute’s Center for Educational Freedom, in an opinion piece titled, “If Only Politicians Were More Like Good Parents.”
“Much more important, though, seems to be the political reality: President Obama appears intent on currying favor with both college students and, frankly, any voters looking at exorbitant college prices and asking ‘how the heck am I going to pay for that?’”
“But it’s not just the current president who appears to be playing politics,” McCluskey wrote. “Mitt Romney, the presumptive GOP challenger to Mr. Obama, (has) also urged Congress to freeze the rate at 3.4 percent.”
Jason Delisle, director of the Federal Education Budget Project at the New America Foundation, has written that borrowers working part-time or low-paying jobs don’t have to worry about the interest rate on subsidized Stafford loans for three years if they enroll in the income-based repayment plan, which caps payments at a share of the borrower’s disposable income or forgives up to three years’ worth of interest if their monthly payments are too low to cover the interest.
“These protections make the rhetoric about lowering interest rates to help college graduates weather a weak job market ill-informed at best,” wrote Delisle, a former senior analyst on the Republican staff of the U.S. Senate Budget Committee, where he helped develop education legislation.
Various efforts in Congress have sought to address the student loan rate issue, but both have met opposition due to competing political interests.
A Senate bill failed earlier this week after Republicans rejected it because it would have eliminated a tax loophole for certain businesses. The Republican-controlled House passed a measure last month that would prevent the subsidized student loan interest rates from doubling, but Democrats in the Senate are unlikely to pass it because it relies on funds for preventive health care that were passed as part of the Obama administration’s health care reform.
“Now they’re (Republican lawmakers) saying they’re willing to keep rates low but only if we take away money from preventive health care,” Biden said. “That’s a choice we shouldn’t have to make.”
Biden’s message seemed to resonate with those in the audience, such as Falon Shackelford, 21, a junior majoring in political science and history at Howard University.
“If we cut spending in other places, like military spending, like all these tax breaks for the rich, like subsidies for oil companies, if we were to take money out of some of those things, we would have money for our education,” Shackelford said.
“It’s a misallocation of funds and it has a disproportionate effect on people of color,” Shackelford added.
While most in the audience were supportive of efforts to prevent interest rates on student loans from doubling, answers were lacking on how to find $6 billion needed to pay for it.
Andy MacCracken, associate director of the National Campus Leadership Council, said he was hopeful that lawmakers on both sides of the aisle could come to terms on how to find the money needed to prevent interest rates from doubling on student loans.
“The students are sitting here hoping the government doesn’t punt this issue,” MacCrackeen said. “With young (people’s) issues, there’s a tendency to use our future for rhetoric, but it’s our reality, and I think if we recognize that both sides will come together and figure out an offset that’s agreeable to both sides.”