On May 24, the United States Senate rejected the opposing Democratic and Republican plans to extend the July 1 doubling of the current subsidized Stafford loan interest rate from 3.4 percent to 6.8 percent.
In 2007, former President George W. Bush signed a bill that reduced the subsidized Stafford loan interest rate to 3.4 percent. At its expiration on July 1, it will be restored to the same rate as the unsubsidized Stafford loan interest rate of 6.8 percent.
Senators voted 62-34 against the GOP plan and 51-43 against the Democratic plan. Each plan would have needed at least 60 votes to pass.
The rejected GOP and Democratic proposals, respectively named the Interest Rate Reduction Act (H.R. 4628) and the Stop the Student Loan Interest Rate Hike Act of 2012 (S. 2343), would have pushed the doubling to July 1, 2013 at a cost of $6 billion each. However, each party was split against each other’s method of paying for the bill.
The Stop the Student Loan Interest Rate Hike Act is legislation that would be fully paid for by eliminating the tax loophole that the watchdog agency, the Government Accountability Office, has determined is a problem that allows some privately held companies and professional businesses to avoid paying their fair share of Social Security and Medicare payroll taxes, said Sen. Brown’s Press Secretary Allison Preiss.
On the other hand, the GOP bill would have funded itself by eliminating a preventative health care program. Deputy Press Secretary of Congressman Joe Courtney (D-Conn.), Vicki Christner, said it would be paid for through the health care slush fund.
“It’s just two issues that need individual support,” Christner said. “The congressman doesn’t believe you should pit education against public health.”
Sen. Sherrod Brown, D-Ohio, a co-sponsor of the S. 2343 bill, said it appears some members of the Senate would rather drag the process out.
“It’s disappointing that some in the Senate would rather preserve tax breaks for the wealthy than help our best and brightest afford the ever-rising cost of a college education,” Sen. Brown stated in a press release.
The Senate Health, Education, Labor and Pensions (HELP) Committee said a higher interest rate would add about $1,000 in loan debt per loan for students. Preiss said Sen. Brown is working to find a way to extend the current interest rate and was recently at Owens Community College in Perrysburg, Ohio to discuss with students the importance of maintaining the 3.4 percent interest rate.
“If the Democrats were interested in a solution, they would have discussed a way to pay for it before bringing their bill up for a vote,” said Sarah Chu, press assistant for the Senate HELP Committee Republicans. “In order for Congress to agree on a bipartisan student loan fix, the Senate Majority should send the legislation through the appropriate committee to get a bill that everyone can agree on.”
Chu said the GOP has suggested different options to pay for the student loan fix and the Obama Administration has yet to respond.
In a letter to President Obama, House Speaker John Boehner, R-Ohio; Senate Republican Leader Mitch McConnell, R-Kentucky; House Majority Leader Eric Cantor, R-Virginia; and Senate Republican Whip Jon Kyl, R-Ariz. gave two options to extend the student loan interest rate deadline. The first proposes to increase federal employee retirement contributions and the second asks to limit the length of in-school interest subsidy, revise the Medicaid provider tax threshold and improve the collection of pension information from states and localities.
A U.S. Department of Education representative, who asked to remain anonymous, said the department has been engaged in a widespread conversation with college presidents.
“We’re going to do more and the President will do more,” the representative said. “College affordability, access and completion are all extremely key initiatives of this department, of the Administration and of the Secretary of Education.”
CLAIRE TAN can be reached at city@theaggie.org.
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