(CBS News) The clock is ticking down to the day when new student loan interest rates are expected to double, and President Obama made his latest appeal to Congress today to extend the current low rate.
If Congress doesn't act by July 1, the interest rate on new subsidized Federal Direct Stafford Loans for undergraduate students will double from 3.4 percent to 6.8 percent. Both Democrats and Republicans (with some exceptions) have agreed they should extend the low rates, but they've been arguing for months over how to pay for the $6 billion extension.
"Congress has had the time to fix this for months," President Obama chided today from the White House, addressing a group of students. "We can't control every economic headwind we face, but this is something we can control... There's 10 days for Congress to do the right thing. They haven't done it yet, and we've got to keep the pressure on."
Republicans emphatically point out that the GOP-led Houseand have reached out to the White House with more ideas on how to pay for the measure. Senate Republican Leader Mitch McConnell suggested the president and Democrats were only objecting to their proposals so they can demonize Republicans to voters.
"The only reason this issue isn't already resolved -- the only reason -- is that the President wants to keep it alive," McConnell said on the Senate floor today. "He thinks it benefits him politically for college students to believe we're the problem."
Regardless of who's at fault, it is definitely clear that young people are strapped with student loan debt like never before and that it is taking a striking toll on their lives and the national economy. Student loan debt last year hit $1 trillion, surpassing even credit card and auto-loan debt.
"The lines of job-seekers are long, states are reducing their higher education budgets, and household budgets are straining," writes Rohit Chopra of the Consumer Financial Protection Bureau. "Young consumers are shouldering much of the punishment in the form of substantial student loan bills for doing exactly what they were told would be the key to a better life. Large levels of debt might also pose immediate problems for the rest of us."
A new report from the Census Bureau sheds light on the how student loan debt may be taking a toll. The number of "shared households" -- a measure of Americans living with roommates or relatives (aside from spouses or cohabiting partners) -- increased by 2.25 million between 2007 and 2010, according to the report. This spike can be largely attributed to 1.2 million adult children moving back in with their parents. Two-thirds of those adult children were between the ages of 25 and 34.
The Census cannot from its data explain the reason for this spike. However, the report notes that if poverty status were determined by personal income, 45.3 percent of young adults aged 25 to 34 living with their parents would have been in poverty in 2010. The official poverty rate for that demographic was 8.4 percent, since official poverty is based on family income.
Republicans are pointing to those dismal stats to explain the political gridlock over what should be a simple issue. "College graduates are struggling to find work and pay their bills in the Obama economy," McConnell said today. "He'd like them to believe it's someone else's fault."
Mr. Obama said today that it wouldn't make any sense for him to talk about student loans if he wanted to distract from his economic record.
"This is all about the economy, whether we are going to have the best-trained, the best-educated workforce in the world," he said. "Higher education... is an economic necessity for every family."
McConnell noted that Republican congressional leadersa few weeks ago on possible ways to pay for the extension, which included upping the contributions federal employees would pay toward retirement. Vice President Joe Biden said the White House was open to GOP proposals, but that "we're not going to trade off student loans for other vital, vital programs."
While the House passed a student loan interest rate extension bill, most Democrats opposed it because its $6 billion price tag was paid for by repealing the Prevention and Public Health Fund -- a fund that would provide for hundreds of thousands of screenings for breast and cervical cancer. Democrats in the Senate filibustered that version of the bill, while. That bill would have required some privately owned companies to pay higher payroll taxes for Social Security and Medicare.