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Education secy: Student loan rate hike weakens fight for U.S. jobs

Thursday - 6/21/2012, 10:28am  ET

AP: 017d5b1f-f338-4d1b-b034-c708b955e72f
Education Secretary Arne Duncan,left, accompanied by Director of the Consumer Financial Protection Bureau Richard Cordray, gestrues during the daily briefing at the White House in Washington, Tuesday, June 5, 2012. (AP Photo/Susan Walsh)

'We have to fight to keep those jobs here'

Education Secretary Arne Duncan speaks with WTOP.

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Paul D. Shinkman, wtop.com

WASHINGTON - Congress' failure to keep student loan debt interest rates at their current levels could have devastating consequences for the future of U.S. jobs, according to the secretary of education, who on Thursday scolded lawmakers for blocking "urgent" legislation.

Senate Republicans successfully filibustered consideration of a Democratic bill earlier this month that would keep the loan interest rates from doubling from 3.4 percent to 6.8 percent. Congress is tasked with finding $5 billion to $6 billion to pay for the measure, which would repeat a 2007 bipartisan effort under a Republican president to keep the interest rate status quo.

Education Secretary Arne Duncan believes it is going to come down to the June 30 deadline to pass what he calls a critical measure.

"We're pushing as hard as we can to make sure that Congress gets past this dysfunction," he told WTOP on Thursday. "If they can come together and get behind anything…it's got to be around education and helping our nation's young people."

This legislation would affect as many as 7 million new undergraduate borrowers looking for a way to offset the rising cost of education, which on average reaches more than $17,000 at in-state universities and over $50,000 at many private schools.

"I feel this tremendous sense of urgency," Duncan says.

The measure has attracted the attention of President Barack Obama, who on Thursday called for Congress to halt the rate increase.

Both sides of the aisle, mired in a hotly contentious election year, agree on keeping student loans at their current levels. Learn more about both sides' plans here.

There are many ways to find the billions needed to pay for offsetting the rise in rates, Duncan says, which is particularly critical to combat a growing fear among middle-class families that college is unaffordable.

"The jobs of the future are going to go where the knowledge workers are," he says, "whether it's in our country, or in Singapore and South Korea and China or India."

"We have to fight to keep those jobs here, and the best thing we can do is have a well-educated workforce," Duncan says.

The subsidized rates aren't the government's only tack to help make college more affordable. The Department of Education has increased financial need-based Pell Grants by more than $40 billion over the next decade without charging taxpayers.

This increase, accomplished by ceasing subsidies for banks, raised some eyebrows on Capitol Hill, Duncan says.

"It was wildly controversial here in Washington," he says. "We thought it was common sense."

The secretary also called on state governments to contribute to the effort by keeping tuition costs low, in the wake of 40 states cutting funding to higher education.

Tuition in Virginia has doubled in the last decade, and is growing at a rate that outpaces income, Gov. Bob McDonnell tells WTOP. He has set a goal of producing 100,000 more university graduates in the next 15 years.

The interest rates Congress must consider by July 1 are "an important piece of the puzzle," Duncan says, "but by no way is it the answer by itself."

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(Copyright 2012 by WTOP. All Rights Reserved.)