Flanked by college students in the White House Rose Garden, the president said unless Congress acts, interest rates on federal student loans will double July 1.
"That means that the average student with these loans will rack up an additional $1,000 in debt," he said. "That's like a $1,000 tax hike. I assume most of you cannot afford that.
"We know that the surest path to the middle class is some form of higher education," Obama said. "You're going to need more than just a high school education to succeed in this economy."
Those in the Rose Garden understand that earning a degree "isn't just the best investment that they can make for their future, it's the best investment that they can make in America's future," he said.
"But like a lot of young people all across the country, these students have had to take on more and more and more debt to pay for this investment."
A similar situation occurred last year led to a bipartisan measure that delayed the increase for a year.
"Now, if this sounds like deja vu all over again, that's because it is," Obama said. "We went through this last summer."
The Republican-controlled House of Representatives passed a GOP bill that would let interest rates rise and fall based on the market. The White House has threatened to veto that bill should it reach his desk and Obama said the bill was neither smart nor fair.
"It fails to lock in low rates for students next year. That's not smart," he said. "It eliminates safeguards for lower income families. That's not fair.
"We cannot price the middle class or folks who are willing to work hard to get into the middle class out of a college education," Obama said. "We can't keep saddling young people with more and more and more debt just as they're starting out in life."
Obama urged students to contact their representatives to take action.