WASHINGTON — College students, freshly relieved of pressure from term papers and final exams, served as a backdrop for President Obama on Friday as he warned of another impending fiscal deadline: Student loan interest rates are set to double in 30 days under current law.
“That means that the average student with those loans will rack up an additional $1,000 in debt,” Obama said. “That’s like a $1,000 tax hike.”
Both Democrats and Republicans say they want to head off an increase in the interest rate for federally subsidized student loans to 6.8 percent as scheduled July 1, but they disagree about how best to manage the rates’ trajectory.
Senate Democrats plan to vote to extend the government-subsidized rate — 3.4 percent for the 7.4 million students with Stafford loans — for another two years, while House Republicans approved a measure last week that would make the rate variable, tied to prevailing market trends.
“I’m glad the House is paying attention to it, but they didn’t do it in the right way,” Obama said. “It fails to lock in low rates for students next year. That’s not smart. It eliminates safeguards for lower-income families. That’s not fair.”
Republicans, eager to avoid liability for burdening the nation’s youngest voters with an increase in debt, accused Obama of “petty partisanship” and blamed the Democratic-controlled Senate for inaction.
“The differences between the House plan and the president’s are small, and there’s no reason they cannot be overcome quickly,” Speaker John A. Boehner said. “But today, rather than working to resolve the issue, the president resorted to a campaign stunt to try to score political points.”
The House measure would allow the Stafford rate for undergraduates to reset each year based on the cost of a 10-year Treasury note, plus 2.5 percent, but it would ultimately cap the rate at 8.5 percent. For graduate student loans, known as PLUS loans, the rate would be the Treasury note plus 4.5 percent, capped at 10.5 percent.
Obama said the Republican proposal “could actually cost a freshman starting school this fall more during the next four years than if we did nothing at all and let the interest rates double on July 1st.”
The Congressional Budget Office estimated that the Republican plan would put the Stafford rate at 5 percent in 2014 and 7.7 percent in 2018.
Like the Republican measure, the plan Obama proposed in his budget would tie the rate to Treasury notes. However, rather than facing a new rate each year, an individual student’s rate would be fixed for the life of the loan.
The Senate will vote on a more straightforward, two-year extension of the current 3.4 percent rate next week, according to Senator Harry Reid of Nevada, the majority leader. In a statement, he called the House bill a “nonstarter.”
— NEW YORK TIMES
HARRISBURG, Pa. — Chelsea Clinton’s mother-in-law is running to recapture the Philadelphia-area US House seat that she lost almost 20 years ago, a defeat ascribed to her vote for President Bill Clinton’s budget plan that increased taxes on the wealthy.
Marjorie Margolies filed paperwork Thursday to run in the crowded Democratic Party primary for Pennsylvania’s 13th congressional district. The incumbent, Democratic Representative Allyson Schwartz, is running for governor and has said she will not seek re-election, leaving the seat open in 2015.
Margolies, 70, a former NBC news reporter, will have plenty of competition. Five others have already filed to run in the primary.
She is now the president of Women’s Campaign International, which she founded, and teaches at the University of Pennsylvania.
She first ran for Congress in 1992, when she was known as Marjorie Margolies-Mezvinsky and was married to former Representative Edward Mezvinsky, an Iowa Democrat who went on to become the party’s Pennsylvania state chairman.
On Aug. 5, 1993, Margolies-Mezvinsky cast one of the two final votes that gave Clinton’s budget a dramatic victory in the House, 218-216. Just hours before she voted, she told a reporter she would oppose the bill, but changed her mind after a phone call with Clinton minutes before the vote. Her 1994 challenger, Jon Fox, focused his campaign on that decision, and voters in the wealthy district turned against her.
Margolies has since divorced Mezvinsky, who went to prison in 2003 for defrauding investors of more than $10 million. He was released in 2008. In 2010, her son Marc Mezvinsky married Chelsea Clinton.
— ASSOCIATED PRESS
ST. PAUL, Minn. — The Democrat gearing up for a rematch against US Representative Michele Bachmann suspended his campaign Friday, proclaiming success in his goal to oust the polarizing conservative from Congress two days after she announced she would not seek reelection.
In an e-mail to supporters, Jim Graves, who narrowly lost to Bachmann last year, said he felt his primary goal of unseating Bachmann was complete even if she decided to step away voluntarily rather than face him in a rematch race.
‘‘We set out to defeat Rep. Bachmann, and that has been accomplished. You should feel incredibly proud,’’ he wrote to his backers.
‘‘After all, it was the grassroots movement that you built that kept the pressure on and forced Rep. Bachmann from her seat in Congress.’’
— ASSOCIATED PRESS