Vilsack tells 4-H and FFA leaders he supports Senate solution for student loan rates
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WASHINGTON, May 7, 2012- Agriculture Secretary Tom Vilsack used a conference call with National FFA Organization and 4-H leaders on Monday to extend President Barack Obama's student loan campaign to the agriculture sector.
“The President has challenged us to work to make America number one in the world again in the number of students graduating from college as a proportion of the population,” he said. “And we can't do that without making it affordable.”
Vilsack said the Administration increased the number of Pell Grants as well as the overall award of a Pell Grant “to make it easier for young people to afford a college education.”
“It's very clear to the President and to me that young people don't always necessarily need a four-year college degree to be successful,” he added. “His second goal over a decade is to increase the number of community college students by five million to make sure we have a skilled and trained workforce as we rebuild this American economy.”
The student loan debate in Congress this week is focused on how to pay for maintaining the current interest rates for Federal Stafford Loans, which are set to double on July 1.
The Senate is considering the Stop the Student Loan Interest Rate Hike Act, S. 2343, which would keep the interest rate on Stafford student loans capped at 3.4 percent. The bill would maintain the interest rate for one year, while requiring the owners of some private businesses to pay more Social Security and Medicare payroll taxes.
"On July 1st, absent Congressional action that the Administration can support, the interest rate on new subsidized Federal Direct Stafford Loans for undergraduate students is set to double, from 3.4 percent to 6.8 percent,” according to a White House statement.
According to the Congressional Budget Office, extending the 3.4 percent interest rate on subsidized Stafford Loans made to undergraduate students for one year would cost roughly $6 billion.
Vilsack said during Monday's call that failure to extend the interest rate reduction could add $1,000 to a student's debt per year.
“This could increase the debt load of young people between $20,000 and $30,000,” he said. “Both the House and Senate are indicating a desire to avoid an increase in the interest rate.”
The House passed the Interest Rate Reduction Act, H.R. 4628, which extends the current loan rate, on April 27. The House bill eliminates a preventative health fund in President Obama's health care plan to pay for the rate stabilization.
“Rather than imposing new tax hikes on small businesses, the House Republican proposal will roll back wasteful spending in ObamaCare to help student borrowers without piling debt on the backs of our children and grandchildren,” said Rep. John Kline, R-Minn. “While this is not a perfect solution, it will enable Congress to develop the long-term solution borrowers and taxpayers deserve.”
Vilsack said he prefers the Senate's solution, which would pay for the loan cap by closing tax loopholes, over the House's solution that is “cutting preventative health care to women.”
“I'm concerned about preventative health care being cut, particularly in rural areas where the health care system is not treated favorably,” Vilsack said, in line with Democratic opposition to the House's bill. The White House indicated it would veto the House proposal if it reached the President's desk.
“No one wants to see interest rates on federal subsidized Stafford Loans double in a few short months,” Kline said in his statement. “Unfortunately, both President Obama and his Democrat allies in Congress have failed to put forward a responsible plan that can extend current rates without raising taxes or adding to the deficit.”
Vilsack broadened his support to freeze the loan rate by emphasizing the importance of young people entering agriculture with degrees in higher education, especially with the average age of today's producer reaching 60 years old.
“It's important to understand the future of agriculture and the important role education is going to play. We're going to have a need for great researchers,” he said. “Education is the key to success of production agriculture.”
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