By JOSH LEDERMAN and PHILIP ELLIOTT
08/09/13
US President Barack Obama signs a student loan bill to keep students' interest rates low during a signing ceremony in the Oval Office of the White House in Washington, DC, August 9, 2013. AFP PHOTO / Saul LOEB (Photo credit should read SAUL LOEB/AFP/Getty Images)
WASHINGTON -- President
Barack Obama signed into law Friday a measure restoring lower interest rates
for student loans, pledging the hard-fought compromise would be just the first
step in a broader, concerted fight to rein in the costs of a college education.
Encircled
by lawmakers from both parties in the Oval Office, Obama praised Democrats and
Republicans alike for agreeing – finally – on what he called a sensible,
reasonable approach to student loans even as he cautioned that "our job is
not done."
"Feels
good signing bills. I haven't done this in a while," Obama said, alluding
to the difficulty he's faced getting Congress, particularly the
Republican-controlled House, to approve his legislative priorities, such as gun
control and budget deals.
"Hint,
hint," he added to laughter.
But
even the feel-good moment at the White House came with reminders of the bitter
partisanship that still makes future deals incredibly difficult for Obama.
House Speaker John Boehner, R-Ohio, called the law part of the "Republican
jobs plan," while House Democratic leader Nancy Pelosi of California said
it "stands in stark contrast to the House Republicans' plan to saddle
families with billions more in student debt."
The
rare compromise emerged only after a frenzy of summer negotiations, with
lawmakers at odds over how loan rates should be set in the future even while
they agreed that a doubling of rates – it kicked in July 1 when Congress failed
to act before the deadline – would be bad policy and bad news for students.
The
legislation links student loan interest rates to the financial markets. It
offers lower rates this fall because the government can borrow money cheaply at
this time. If the economy improves in the coming years as expected, it will
become more costly for the government to borrow money, and that cost would be
passed on to students.
About
11 million students this year are expected to have lower interest rates, saving
the average undergraduate $1,500 on interest charges on this year's loans.
Boehner
called it "a good day" and a fine example of what Washington
"With
the stroke of a pen, we've now officially taken the politics out of student
loans," he said.
Obama
cast the student loan deal as just the first of many measures the U.S.
"The
cost of college remains extraordinarily high. It's out of reach for a lot of
folks," Obama said, calling it a burden as well on families who have to
balance other priorities, like buying a home, with helping fund their
children's educations. "We've got to do something about it."
To
that end, Obama said he'd be looking to the same coalition of political forces
that came together on student loans as he pursues further steps.
White
House officials have said Obama plans to lay out a broad and aggressive
strategy in the coming months to tackle the spiraling cost of a college
education. Even as they passed the bill weeks earlier, congressional officials
were already talking about a broader approach to curbing fast-climbing costs
and perhaps scrapping the deal when they take up a rewrite of the Higher
Education Act this fall.
Rates
on new subsidized Stafford loans doubled to 6.8 percent July 1 when Congress
couldn't agree on a way to keep them at the previous 3.4 percent rate. Without
congressional and presidential action, rates would have stayed at 6.8 percent.
The
compromise is a good deal for all students through the 2015 academic year.
After that, interest rates are expected to climb above where they were when
students left campus in the spring, if congressional estimates prove correct
for 10-year Treasury notes.
Undergraduates
this fall will borrow at a 3.9 percent interest rate for subsidized and
unsubsidized loans. Graduate students would have access to loans at 5.4
percent, and parents would borrow at 6.4 percent. The rates would be locked in
for that year's loan, but each year's loan could be more expensive than the
last.
Interest
rates will not top 8.25 percent for undergraduates. Graduate students will not
pay rates higher than 9.5 percent, and parents' rates would top out at 10.5
percent. Using Congressional Budget Office estimates, rates would not reach
those limits in the next 10 years.
No comments:
Post a Comment