White House presses Congress to ‘quickly’ act on loan rates

White House spokesman Jay Carney on Monday said President Obama expects Congress to “quickly” pass legislation on student loans, a week after lawmakers failed to strike a deal to prevent rates doubling from 3.4 to 6.8 percent.

"We expect and hope that Congress will fix this problem, quickly,” Carney said, adding that the "differences are not that different" between Republican and Democratic proposals.

ADVERTISEMENT
Carney pledged that the administration would “work with the Senate and the House" on a deal, and expressed optimism that there are “a variety of ways to reach that solution.”

"There's a way to do this retroactively so students are spared from having their rates double," he added.

Republicans have hammered the White House and congressional Democrats on the issue in recent weeks, noting that the Senate did not take up the president's student loan proposal or pass a version of its own before rates doubled.

"Senate Democrats attacked the president's plan, refused to work with us, and allowed this rate hike to take effect, leaving for the July Fourth holiday without passing a solution," said Rep. Lynn Jenkins (R-Kan.), in the GOP’s weekly address.

"For too long, politicians have been in charge of setting these rates, and we keep coming back to cliffs and deadlines like this one," Jenkins added. "Paying for college is difficult enough without all this uncertainty. I have two kids in college, I know how hard it can be."

Senate Democrats are set to vote on a pair of plans this week amid intensifying pressure.

The Senate first plans to vote on a one-year extension of the 3.4 percent rate, although that is not expected to garner enough Republican support to pass because it is offset by closing a tax loophole that benefits those with inherited retirement accounts.

The Senate will then likely consider a bipartisan bill championed by Sens. Joe Manchin (D-W.Va.), Tom Carper (D-Del.), Angus King (I-Maine), Lamar Alexander (R-Tenn.), Richard Burr (R-N.C.) and Tom Coburn (R-Okla.), that would peg loan rates to 10-year Treasury notes, plus 1.85 percent. Interest rates would be higher on graduate student loans, but students would lock in their rate at the time they borrowed.

The White House has proposed tying student loan interest rates to the interest rate on 10-year Treasury notes, which is expected to be about 2.9 percent next year. Under Obama's plan, students would lock in whatever interest rate they initially borrowed at for the life of their loan.

The president's plan also would expand income-based repayment and loan forgiveness options that can lower or eliminate payments for those who take low-paying or public-sector jobs. All borrowers would be guaranteed that their federal student loan payments never exceeded 10 percent of their discretionary income.

The House Republican bill already approved by the lower chamber also ties loan rates to the Treasury notes. But under this proposal, rates could rise in subsequent years — similar to an adjustable mortgage — and no income-based payment cap is included. The White House has threatened to veto the GOP bill.

Republicans saw the issue become a political hot potato last summer, when Obama found traction on the issue in the midst of the presidential campaign.

The president led a campaign-style tour of college campuses, warning that rate increases would cost the average student borrower $1,000 for each year of college. GOP presidential candidate Mitt Romney also supported legislation to prevent a hike in rates, and Congress eventually extended the current loan rate for another year.

This time around, the GOP is looking to highlight the issue.

Late last month, Speaker John Boehner (R-Ohio) said the president should "compel" Senate Democrats to act.

“Without your intervention, Senate Democrats are going to double interest rates for millions of college students,” Boehner said in a letter sent to Obama.