RENEE MONTAGNE, HOST:

At the White House, this morning, President Obama was surrounded by college students as he called on them to fight big hikes in loans. Interest rates on government-backed college loans are set to double, unless Congress agrees on a fix before July 1st. The president has threatened to veto a Republican bill that would let the cost of student loans fluctuate with the market.

NPR's Scott Horsley reports.

SCOTT HORSLEY, BYLINE: If the alarm bells over rising student loan rates sound familiar, that's because we went through this very same exercise last year. Back then, the president went on a barnstorming tour of college campuses, warning that a doubling of interest rates would cost the average student borrower a thousand dollars for each year of college, over the life of his loan.

PRESIDENT BARACK OBAMA: I'll do a quick poll. This may be unscientific. How many people can afford to pay an extra thousand dollars right now?

AUDIENCE: No.

HORSLEY: Eventually, Congress agreed to keep rates where they were at 3.4 percent for one more year. Now, that year is almost up. And students are again facing the prospect of rates doubling to 6.8 percent July 1st. This morning, the president is urging Congress to block that increase.

Tobin Van Ostern, who's with the campus arm of the left-leaning Center for American Progress, says students will be making the case themselves when they descend on Washington next week.

TOBIN VAN OSTERN: All day, we'll have people going in and out of Congress buildings, meeting with senators and sort of, you know, bringing their personal stories and experiences directly to those who have the ability to keep interest rates low.

HORSLEY: Van Ostern says lawmakers do seem to have learned a lesson from last year's showdown. No one is eager to see rates double overnight.

OSTERN: Everyone seems to be in agreement that we need to do something about student loan interest rates, to keep them low and affordable for borrowers.

HORSLEY: The president and congressional Republicans have offered different plans to do that, though they both start the same way: tying rates on student loans to the interest on a 10-year Treasury note. That rate is expected to be about two and a half percent next year, climbing to just over five percent in 2018.

Under the GOP plan, a student who borrows money next year could see his interest rate rise every year after that, like an adjustable mortgage. In contrast, the president's plan would let students lock in rates for the life of their loan.

Beth Akers, of the Brookings Institution, thinks students might like that predictability.

BETH AKERS: So it simplifies the math that they need to do when they're considering going to college.

HORSLEY: On the other hand, Akers gives the Republicans credit for setting an upper limit on interest rates of eight and a half percent. There's no such cap on the president's plan.

AKERS: I do think that a cap makes sense, because in a period of economic expansion, where we do have interest rates rising rapidly, we wouldn't want to see less college-going among students who are on the margin of being able to afford go to college.

HORSLEY: Lower-income students would continue to get a break under the president's plan, with interest rates two percentage points lower than others are paying. Under the GOP plan, Van Ostern notes, all students would pay the same rate.

OSTERN: In reality, that ends up meaning that lower-income folks will pay a little bit more. And then it will save people who are middle- or upper-income folks some money.

HORSLEY: Compared to some other fights in Washington, these differences don't seem insurmountable. But unless lawmakers and the White House can agree on the details quickly, Van Ostern says another temporary stopgap measure may be necessary.

OSTERN: July 1st is not far away, which is the deadline when these interest rates will double. And so, if we can't come up with a long-term plan by then, and time is ticking, then we certainly need to at least pass a short-term extension of current interest rates, to give folks in Congress a little more time to figure out how to deal with it long term.

HORSLEY: The whole idea behind the switch to market rates is to take some of the politics out of the student loan business. For now though, it's clear that politics is still standing in the way.

Scott Horsley, NPR News, Washington.

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