Move over, Buffett Rule.
Interest rates on federal student loans are set to become the next election-year flash point between President Obama and congressional Republicans.
The White House announced Friday that it is launching a major campaign to keep rates on federal Stafford loans at their current levels – 3.4 percent – beyond July 1, when by law they are set to double.
The rate change would impact an estimated 7.4 million students, who would each see an additional $1,000 in debt per year at the higher rates, according to the administration.
The College Cost Reduction and Access Act, passed in 2007, gradually phased down rates from 6.8 percent over each of four successive academic years, but mandated that the cuts would expire in 2012.
“At a time when Americans owe more on student loans than credit cards, President Obama believes we must reward hard work and responsibility by keeping interest rates on student loans low so more Americans get a fair shot at an affordable college education,” an administration official said in a statement.
Obama plans to dedicate his weekly address to urging Congress from preventing the rate hike and will call for a social media blitz on lawmakers using the hashtag #DontDoubleMyRate.
The president will also visit three college campuses next week and appear for the first time on “Late Night with Jimmy Fallon” to discuss the issue.
He will speak at the University of North Carolina at Chapel Hill and the University of Colorado at Boulder on Tuesday. He will appear at the University of Iowa on Wednesday, the White House said. All three schools are in key battleground states.
Some republicans oppose extending the lower student loan rates in part because of the high cost to taxpayers, which the Congressional Budget Office estimates at $6 billion per additional year.
“Bad policy based on lofty campaign promises has put us in an untenable situation,” said Rep. John Kline, R-Minn., who chairs the House Committee on Education and Workforce.
“We must now choose between allowing interest rates to rise or piling billions of dollars on the backs of taxpayers,” he said. “My colleagues and I are exploring options in hopes of finding a responsible solution that serves borrowers and taxpayers equally well.”