Bush opposes Democrats' student-loan rate cut

Warning that it may be bad to encourage students to borrow more, the White House announced Tuesday that it is opposed to a student loan interest rate cut being pushed this week by House Democrats.

"Student debt loads have soared in recent years, and it is not clear that encouraging more loans is a wise course," the White House's Office of Management and Budget said in a statement of opposition. Encouraging more debt could "fuel today's upward tuition spiral," the OMB warned.
A statement of opposition is stronger than one expressing "concerns" but is several steps shy of the threat of a veto.

The House bill would raise fees on and cut profit margins for student lenders to offset a proposed cut in student-loan interest rates for lower-income families.

According to an estimate of the bill released Tuesday afternoon by the Congressional Budget Office, the rate cut would cost $8.1 billion over the next five years.

Increased loan fees would raise $2.7 billion and reducing guaranteed lender profit margins would raise another $2.5 billion over the same period, according to CBO. The remainder of the cost would be raised by reducing lender guarantees and retaining certain guaranty agency collections.

A Senate version of the interest rate cut plan would encourage students to use direct loan programs, in theory saving money by cutting out private sector middlemen......