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Romney, Obama on Same Page When It Comes to Loan Rates

By Alyson Klein — April 23, 2012 3 min read
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Former Massachusetts Gov. Mitt Romney, the presumed GOP presidential nominee, is on board with temporarily freezing interest rates on federally subsidized student loans—a position that could put him at odds with some congressional Republicans, who are concerned about the impact of the proposal on the deficit.

Federal student loan interest rates are set to double on new loans July 1, from 3.4 percent to 6.8 percent, unless Congress acts. President Obama has made student loan rates a big issue this week, calling on Congress in his Saturday radio address to act to prevent the increase.

And today, Romney said he agrees. Romney notes that the job prospects for college grads aren’t so hot right now, so he’s urging Congress to go ahead and approve a freeze on college loan rates. He also wants to see lawmakers pass some sort of offset (aka cut elsewhere) to make up for the cost, estimated at $6 billion annually.

Romney still gets in a dig at Obama’s economic policies, even while essentially agreeing with his stance.

“President Obama’s failed leadership on the economy has led to the weakest recovery since the Great Depression, where 50 percent of recent college graduates are unemployed or underemployed,” Romney said in a statement. “Given the bleak job prospects that young Americans coming out of college face today, I encourage Congress to temporarily extend the current low rate on subsidized undergraduate Stafford loans. I also hope the President and Congress can pass the extension responsibly, that offsets its cost in a way that doesn’t harm the job prospects of young Americans.”

Romney’s statement is especially interesting in light of comments about the president’s proposal last week from U.S. Rep. John Kline, R-Minn., the chairman of the House Education and the Workforce Committee. Kline didn’t completely put the kibosh on the idea of keeping rates stable, but he said he had “serious concerns” about the proposal, in particular its impact on taxpayers.

“Bad policy based on lofty campaign promises has put us in an untenable situation,” Kline said in a statement. “We must now choose between allowing interest rates to rise or piling billions of dollars on the backs of taxpayers. I have serious concerns about any proposal that simply kicks the can down the road and creates more uncertainty in the long run—which is what put us in this situation in the first place. My colleagues and I are exploring options in hopes of finding a responsible solution that serves borrowers and taxpayers equally well.”

So will Republicans back Romney and go ahead with keeping loan rates stable, for now? The issue could be an early test of just how much sway Romney has with congressional GOP lawmakers.

It’s still unclear how things will shake out. Here’s what Kline’s spokeswoman, Alexandra Sollberger, had to say in response to Romney’s statement:

Chairman Kline and Governor Romney both agree the president's failed leadership over the economy has left one out of every two college graduates struggling to find a job. America's workers and job seekers can no longer afford to pay the price for the president's reckless policies. Chairman Kline will continue to work with his colleagues in an effort to find a responsible solution that protects the interests of borrowers and taxpayers.

Meanwhile, Obama is giving the issue the full-court press this week. He’s going to colleges in three swing states (Colorado, Iowa, and North Carolina) to talk about the doubling of the interest rate. He’s even going to appear on Jimmy Fallon’s late night talk show to push the issue, taping a segment Tuesday.

College loans seem like a two-fer for Obama. It’s a way to excite the college-age voters who provided some major get-out-the-vote muscle to his campaign back in 2008. About 7.4 million students will be effected by the rate change, the administration estimates.

And Obama might be able to make in-roads with their parents, who sometimes help pick up the tuition check. That could be why Romney has decided not to let Obama have this issue.

The Obama administration has suggested a bunch of proposals to hold down college costs, such as Race to the Top for colleges and tying federal financial aid to student outcomes. But those proposals are unlikely to make it past a divided Congress—and it’s unclear whether any of them would result in holding down tuition increases. More here.

Photo: Republican presidential candidate Mitt Romney appears a town hall-style meeting in Aston, Pa., on April 23. “I think young voters in this country have to vote for me if they’re really thinking of what’s in the best interest of the country and what’s in their personal best interest,” he said. (Jae C. Hong/AP)

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