President Obama is pushing back against a Republican effort to end the in-school interest subsidy on federal student loans, The Daily Beast reports.
According to the news site's report, the president reacted angrily when the House majority leader, Rep. Eric I. Cantor, proposed the cut during deficit-reduction talks on Tuesday. Sources said the president objected to the Republicans' growing list of spending-cut proposals and lack of compromise on the tax-increase side, saying, "I'm not going to do that. I'm not going to take money from old people and screw students."
Mr. Obama and Congressional leaders have been mired in negotiations over legislation to raise the federal debt limit and reduce the deficit for several days, with Republicans insisting that any new borrowing be offset by spending cuts. The stakes in the negotiations are high: The federal government is expected to reach its borrowing limit on August 2, and without a deal, the country is likely to default on its debt.
Ending the in-school interest subsidy on student loans would save the government $43-billion over 10 years, according to a 2010 report by the chairmen of a deficit-reduction commission appointed by President Obama, which endorsed the cut.
This is not the first time that the interest subsidy has been on the chopping block. Republicans proposed requiring students to pay interest on their loans while still in college as far back as 1994, as part of their "Contract With America." House Republicans revived the idea in their budget blueprint for the 2012 fiscal year, arguing that there is "no evidence" that the subsidy increases college attendance. Even President Obama has supported ending the interest subsidy for graduate students—but not undergraduates—as a way to cover the shortfall in the Pell Grant program.