Reprising the "Don't Double My Rate" theme used during the 2012 presidential campaign, the White House is pushing a plan by President Obama this week to prevent interest rates on some student loans from doubling effective July 1. However, the savings for most borrowers is rather less significant than might appear at first glance. The White House uses the example of an incoming freshman, who they say will save $4,000 under the president's plan:
If Congress fails to act, college will be further out of reach for millions of students and families. In fact, an incoming freshman who borrows $27,000 over the next four years -- a typical debt incurred by today’s college graduates – is projected to pay over $4,000 dollars more over the life of their loans without the President’s proposal.
However, the chart included with the plan shows that the average savings for student loan borrowers is actually $1,126. Despite tweets from the White House that seem to suggest the savings are annual ("Last year, President Obama helped students save an average of $1,000 on their college loans"), the footnote to the chart explains that the savings assumes the borrower "repays the loans over the expected period of 12 years." A savings of $1,126 over twelve years is $94 per year, or about 25¢ a day.