So now that Gov. Mitt Romney, the presumptive GOP nominee, and President Obama have both said they’d like to stop interest rates on student loans from doubling on July 1, lawmakers in Congress are scrambling to figure out a way to make it happen.
Quick recap: Obama jump-started the frenzy over the weekend, when he called on Congress to keep rates at 3.4 percent in his Saturday radio address. He’s taken the show on the road this week, calling for the change at universities in three key swing states—Colorado, Iowa, and North Carolina—and even “slow-jammed” his request on Jimmy Fallon’s late night talk show (watch the video at thisweekineducation.)
Then Romney surprised some folks by saying he’s also on board (although he blamed Obama’s economic priorities for making it tough for kids to pay their loans back.)
So now that it’s a presidential election issue just about everyone has put out a bill to temporarily stop the rate hike, for at least a year—well after the election.
The big question? Exactly how to pay for the change. There are a lot of ideas floating out there.
Some Senate Democrats, including Sen. Tom Harkin, of Iowa, the education chairman, want to make some tax changes for certain businesses they argue aren’t paying their fair share. Some House Democrats, including Rep. George Miller, of California, want to cut oil subsidies. And some House and Senate Republicans, including Sen. Lamar Alexander, of Tennessee, and Rep. John Kline, of Minnesota, are eyeing part of the health care law.
The first piece of legislation likely to move forward is the House Republican bill, which is slated for action as early as Friday. The bill, which is sponsored by Rep. Judy Biggert, R-Ill., would pay for keeping interest rates on student loans at 3.4 for a year by cutting a portion of the health care law called the “Prevention and Public Health Fund.”
Biggert’s bill has the support of Kline, the chairman of the House Education and the Workforce Committee, and Rep. John A. Boehner, R-Ohio, the speaker of the House. Earlier (before Romney came out in favor of keeping rates at 3.4) Kline and Boehner had each expressed concerns about the impact of the proposal on taxpayers, but stopped short of saying they didn’t want to head off the rate hike.
Biggert’s bill presents an opportunity for Congress to start working towards a longer-term solution on student loan rates, which could involve moving to a variable rate, said Kline’s spokeswoman, Alexandra Sollberger.
For his part, Boehner said the Biggert bill would provide a workable way to fund rate stability.
“What Washington shouldn’t be doing is exploiting the challenges that young Americans face for political gain,” Boehner says in a statement. “And it shouldn’t be sticking small businesses with a health care law that’s...making it more difficult for them to hire workers. Let’s fix the problems for young Americans, and leave the campaign theatrics for the fall.”
But Rep. Dale Kildee, D-Mich., another long-time member of the House education committee, has a different interpretation.
“The House Republican bill to extend student loan interest rates proves that there is nothing more sacred to their party than oil and gas subsidies. Instead of using those unnecessary subsidies to pay for extending student loan rates, the Republicans would rather take away money from programs that prevent chronic illnesses,” Rep. Kildee says in a statement.
The bottom line? Rates will probably stay at 3.4 after all’s said and done, but there will be a lot of wrangling and rhetoric before we get there. And the tea party (very conservative House members) could be a wild card in all this.