Obama speaks on his latest appeal to Congress Thursday, June 21 to extend the current low interest rate on student loans.
(CBS NEWS) President Obama on Friday signed into law a student loan bill, bringing to an end a saga that illustrated the high level of gridlock on Capitol Hill.
The bill ensures that interest rates on federal student loans taken out this fall will not double to 6.8 percent. The issue was stalled in Congress for months, even though both Democrats and Republicans agreed they wanted to keep interest rates low for students.
Before signing the bill in the Oval Office, with lawmakers and student advocates standing at his side, Mr. Obama praised Congress for designing "a sensible common sense approach to keeping student interest rates at a reasonable level."
Democrats and Republicans were largely at odds over whether to tie interest rates to the market. After failing to reach an agreement by July 1, interest rates doubled from 3.4 percent to 6.8 percent. The measure Mr. Obama signed today retroactively lowers the interest rate. Going forward, it gives undergraduates a 3.9 percent interest rate on their loans, allows graduate students to borrow at a 5.4 percent interest rate, and allows parents at a rate of 6.4 percent. The interest rates will be tied to the market, as Republicans wanted, but Democrats insisted on adding caps so that the rates will not exceed certain levels.
The new rates will affect millions of Americans taking out student loans this year. According to CBS News analyst Mellody Hobson, a higher rate could have a noticeable impact on the economy. Debt takes a toll in various ways; for instance, someone with student loan debt is 36 percent less likely to own a home.
"Even though we've been able to stabilize the interest rates on student loans, our job's not done," Mr. Obama said. "The cost of college remains extraordinarily high."
Student loan debt is a "huge burden" on students, and "it has a depressive effect on our economy overall," the president said, promising he'll have more to say about the issue in the weeks to come.
Stephanie Condon, CBS NEWS