Senate Democrats searching for another student-loan rate stopgap
posted at 2:41 pm on July 8, 2013 by Erika Johnsen
Along with immigration and the in-limbo status of the farm bill, the issue of student loans will also be atop the Congressional agenda as lawmakers return from the July 4th recess. Last week, the fixed rate for federally subsidized student loans automatically jumped from 3.4 to 6.8, and rather than take up the House GOP’s suggestion that they allow the rate to be tied more closely to — you know — the free market rather than lawmakers’ most arbitrary and political whimsies, Senate Democrats insisted that the GOP’s was an unacceptable solution and instead allowed the stopgap measure holding over the rates from last summer (before the election, hem hem) to expire.
The new rate, however, will only apply to new federally subsidized loans, for which students will be signing up in earnest over the following month or so — and Democrats are hoping to get something, even just another temporary measure, resolved before the new college school year starts. Via Politico:
In the days since the missed deadline, Washington’s political apparatus has been a muddle of messaging. House Republicans are blasting Senate Democrats for not passing a bill as the lower chamber has done, albeit one that President Barack Obama has threatened to veto. And lawmakers from both parties are now using the #DontDoubleMyRate hashtag on Twitter, first popularized by Obama at the height of last year’s presidential campaign.
Senate leaders concede that the optics aren’t great. A Democratic leadership aide called the situation “awkward,” adding: “We need to get it resolved.” …
The Senate will quickly focus on getting the issue off its plate, especially since there is no clear legislative priority list yet post-immigration bill. Leaders are mulling putting forward bipartisan energy efficiency and pharmaceutical safety bills, a defense reauthorization or perhaps an appropriations bill.
How exactly that happens remains as “clear as mud,” as one aide put it. The Senate is angling for a vote on a proposal sponsored by 42 Democrats that would extend for a year the rate of 3.4 percent for those subsidized loans. Sen. Tom Harkin (D-Iowa) said he thought Republicans might sign on to another one-year extension after doing so last year. …
The House already passed its own fix (on which the White House bizarrely issued a veto threat, seeing as how the proposals weren’t that different), and Republicans are looking to put the hammer down this week and get the issue off the table:
Rep. Lynn Jenkins, R-Kansas, faulted Senate Democrats on Saturday for this week’s hike in student loan interest rates and urged the upper chamber to pass legislation that resolves the issue as soon as the holiday recess ends.
“For too long, politicians have been in charge of setting these rates, and we keep coming back to cliffs and deadlines like this one,” Jenkins said in the GOP weekly address. “Paying for college is difficult enough without all this uncertainty. I have two kids in college, I know how hard it can be.” …
Top Senate Democrats want a cap in place to protect students if interest rates spike. That is at odds with the slightly different proposals from President Barack Obama and various congressional Republicans, which are tied to 10-year Treasury bond rates and would include charges for administrative costs but would not include caps.
Republicans, who prefer a more market-based approach, often point out that the White House’s proposal falls more in line with their own.
“When President Obama proposed letting the markets set interest rates instead, the Republican-led House passed a bill reflecting his plan,” Jenkins said. “Republicans in the Senate came to the table with similar ideas. Unfortunately, Senate Democrats attacked the president’s plan, refused to work with us, and allowed this rate hike to take effect, leaving for the July 4th holiday without passing a solution.”
All of which, at the end of the day, is still relatively trivial anyway, seeing as how a doubled rate would only add a matter of a few dollars to the average student debtors’ payments, and the real, glaring, intractable problems are both the government’s endless interference directly inflating tuition prices and the poor economy and employment scenario into which young people are graduating. Ugh.