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President Obama has called on Congress to prevent subsidized student loan rates from doubling from 3.4 percent to 6.8 percent. Speaking in the Rose Garden on Friday morning, he called for a quick solution to a problem that would afflict young people already saddled with big loans as they emerged into a very difficult job market.

“If Congress doesn’t act by July 1, federal student loan rates are set to double. It’s like a $1,000 tax hike,” the president, surrounded by college students, said.

Obama’s plan ties the rate to the 10-year Treasury rate, and fixes that loan to the rate when it is issued. It also provides funding to assist struggling students based on their income.

House Republicans have passed their own student loan fix that, like the president’s plan, ties rates to the market rate, but their plan allows rates capped at 8.5 percent to rise and fall with the economy over the life of the loan.

“I’m glad that they took action, but their bill does not meet that test. It fails to lock in low rates for students next year,” Obama said. “The House bill isn’t smart, and it’s not fair. I’m glad that the House is paying attention to it, but they didn’t do it in the right way.”

The president’s bill is designed to keep the cost of loans low by limiting repayments to 10 percent of the borrower’s discretionary income“Higher education cannot be a luxury for a privileged few,” he said.

In 2011, the average student owed nearly $27,000 in loans.

“According to the Federal Reserve Board of New York, the share of student loan balances 90 or more days delinquent surged to 11.7 percent in the last two quarters—three percentage points higher than the same time last year—elevating student loans, for the first time, to the ignominious distinction of having a worse repayment rate than credit cards,” according to The Century Foundation’s Benjamin Landy.

Rather than calling for a comprehensive fix now, Senator Elizabeth Warren (D-MA) has introduced a bill that would tie student loan rates to the Federal Reserve’s overnight rate of .75 percent that banks pay for one year, while Congress figures out a lasting solution. A petition supporting her bill has more than 400,000 signatures.

“The student loan bill passed by House Republicans takes a bad situation and makes it worse,” Warren said in a statement issued when the House bill passed.

The CBO found that the president’s plan would save the government $3.1 billion over a decade.

“We know that the surest path to the middle class is some form of higher education,” said Obama, who pointed out that he and the First Lady only finished paying off their loans in the last decade.

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