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White House urges Congress to act "quickly" on student loan rates hike


09:01, July 09, 2013

WASHINGTON, July 8 (Xinhua) -- The White House on Monday urged U.S. Congress to act "quickly" on student loans legislation, a week after lawmakers failed to strike a deal to prevent rates from doubling.

"We expect and hope that Congress will fix this problem, quickly," said White House spokesman Jay Carney.

Carney said the administration would "work with the Senate and the House" to reach a deal and believed there were "a variety of ways to reach that solution."

"There's a way to do this retroactively so students are spared from having their rates double," he said.

The interest rates on new federally subsidized student loans doubled on July 1 from 3.4 percent, a temporary rate reduction that was enacted in 2007. A last-minute approval by U.S. Congress in June, 2012 has extended the subsidized interest rates for a year.

The Republican-controlled House of Representatives has passed a market-based Republican bill that would permanently link federal student loan interest rates to government interest rates.

The bill creates a permanent fix by setting student loan interest rates at a level equal to the 10-year Treasury note rate, plus 2.5 percent.

But Democrats argued that the bill would actually allow the rates to rise above 6.8 percent in the coming years and students could be forced to pay higher rates on old loans.

Under Obama's plan, loan rates would equal the 10-year Treasury note rate, plus 0.9 percent, but did not include a cap on rates. Obama's plan also calls for a rate that is fixed for the life of the loan, instead of the variable rate.

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