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Federal student loan debt threatens fragile recovery



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Still, Obama said: "We can’t just keep subsidizing skyrocketing tuition. We’ll run out of money."

The Democratic minority on the House Education Committee and Workforce Committee released new figures showing that more than seven million students will incur an additional $6.3 billion in repayment costs for the 2012-2013 school year if student loan interest rates double on July 1.

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Obama also asked Congress to extend the current tuition tax credit, double work-study jobs over five years and let borrowers consolidate multiple student loans at reduced interest rates.

But in this intensely partisan year, any congressional action seems dubious.

"I wish I could tell you that there’s a place to find really cheap money or free money and pay for everyone’s education, but that’s just not going to happen," Romney says. "Now the government is taking over the student loan business. I think you’ll get less competition."

The government has not taken over the student loan business. The private loan industry is still writing student loans, usually at interest rates far above the government ones.

What the Republicans are zeroing in on is a section in Obama’s health care overhaul that eliminated big banks as middlemen in managing federal school-loan programs. Also, the new federal Consumer Financial Protection Bureau is clamping down on the lightly regulated private student loan industry.

Santorum, who now says calling Obama a "snob" for promoting higher education was "probably not the smartest" choice of words, has been seeking to rally blue-collar support by emphasizing that many jobs do not require college degrees — and suggesting many colleges are liberal bastions.




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