By Justin Sink - 05/31/13 03:08 PM EDT
President Obama called on Congress to pass legislation to prevent an increase in student loan rates, picking a fight with Republicans on what has previously been a winning issue for the White House.
Speaking from the Rose Garden, Obama warned that higher student loan interest rates will restrict access to higher education and argued legislation passed by the Republican House could leave students paying more.
Republicans fired back even before Obama made his remarks, arguing the president was using the issue to change the subject from a series of controversies dogging the White House.
They also argued the two sides aren’t as far apart on the issue of student loan interest rates as Obama suggested. The GOP bill would peg interest rates on student loans to a variable Treasury rate. They argue Obama himself has backed a similar plan in the past.
“I mean, come on,” said Brendan Buck, a spokesman for House Speaker John Boehner (R-Ohio). “The White House would no doubt love to change the subject from all of its various scandals, but trying to pick a fight over a plan that mirrors the president’s own, giving him a 'rare win,' is pretty pathetic.”
Interest rates on federally backed student loans are set to jump from 3.4 percent to 6.8 percent on July 1, just like last summer when the president found traction on the issue in the midst of the presidential campaign.
At the time, Obama went on 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.
“If this sounds like déjà vu all over again, it is,” Obama said on Friday. “We did this last year.”
The White House has proposed tying student loans 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 expands 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 their proposal, rates could rise in subsequent years — similar to an adjustable mortgage. The White House has threatened to veto the GOP bill.
“It isn't smart, and it's not fair,” Obama said Friday, adding that rising interest rates could theoretically cost students more than if the government simply let rates double back to 6.8 percent. “I'm glad that the House is paying attention to it, but they didn't do it in the right way.”
Senate Minority Leader Mitch McConnell (R-Ky.) said in a release “no one should be fooled by today’s campaign-style event at the White House.”
“Unfortunately, the president appears more interested in needlessly stoking partisan divisions in Washington than helping young Americans avoid a higher interest rate on their student loans,” McConnell said.
Obama was undoubtedly seeking to harness the power of the bully pulpit at the event, telling students he was "putting my faith in you" to compel Congress to act.
"You made something bipartisan happen in this town — that's a powerful thing," Obama said.
White House spokesman Josh Earnest on Friday denied any ulterior political motive for the president's Rose Garden event.
"The exclusive goal of the event today was to continue to reinforce the priority that the president laid out," Earnest said.
Earnest said while it differed from the president's own plan, the White House would support an alternative proposal floated by Senate Democrats that would simply extend the current interest rates for two years.
"It is something we would support, because it addresses these other concerns about locking in rates," Earnest said.
--This report was updated at 1:53 p.m.