Obama administration officials on Tuesday called for Congress to pass a bipartisan compromise to reduce interest rates on student loans, a rare embrace by the White House of a bill with widespread conservative support — and one also opposed by some Senate Democrats.
“We’re really, really pleased Congress is coming together now,” Education Secretary Arne Duncan told reporters Tuesday, putting the White House at odds with Democrats who say the compromise doesn’t do enough to protect students.
Interest rates for Stafford loans doubled to 6.8 percent at the start of July because Washington could not unite behind a fix. Under the compromise now endorsed by the White House, interest rates for undergraduates would fall to 3.86 percent and 5.4 percent for graduate students.
Future interest rates would be capped at 8.25 percent for undergrads and 9.5 percent for graduate students. The White House says the deal would save the average undergrad $1,500.
The proposal would link interest rates on student loans to the market, instead of establishing a fixed rate each year. And the White House, oddly enough, was on the same page as Senate Minority Leader Mitch McConnell, R-Ky., on Tuesday.
“We’ve agreed on the need to pursue permanent reform for all students, not just a short-term political fix for some of them,” McConnell said. “Democrats need to finally allow the bipartisan student loan reform proposal to come to a vote this week, so we can pass it and ensure there’s one less Washington-created problem for young people to worry about in this economy.”
The upper chamber is expected to vote on the bill this week. Democrats say more needs to be done to reform the entire college-loan system as opposed to just interest rates. And some liberals argue that under the current compromise, the federal government would make $715 million in profit over the next decade from student loans.
“At a time when Democrats control the White House and the U.S. Senate, we should not support bad legislation almost identical to that passed by a very conservative, Republican-led House,” said Sen. Bernie Sanders, I-Vt. “Our job is to listen to the people who elected us and stand up for working families and their kids, not make their lives more difficult.”
It’s a criticism that Duncan acknowledged on Tuesday but one which he said Democrats should focus on another day.
“This debate now is all just about the cost of debt,” Duncan said in the conference call organized by the White House. “The much, much bigger challenge is the amount of debt itself. This is a starting point, but by no means does this make [the cost of] college more affordable for middle-class families, which our goal needs to be.”