Student Loans Interest Rate Battle Heads To Senate

WASHINGTON — The White House pressed Republicans Monday to back Democratic legislation preventing interest rates on federal student loans from doubling in July as the two parties remained deadlocked over how to pay for the move.

"As the economy continues to recover, and at a time when market interest rates are at historic lows, students who rely on loans to finance postsecondary education should not be burdened with additional college debt," the White House said.

The statement, which seemed aimed at raising the discomfort level among GOP senators, came as the Senate debated a $6 billion Democratic bill keeping today's subsidized Stafford loan interest rates of 3.4 percent from doubling for another year.

Republicans back freezing the interest rates too, but oppose how Democrats would finance their measure. Democrats would force owners of many privately owned companies to pay more Social Security and Medicare payroll taxes.

"They'd like to raise money in the middle of the largest recession we've had since the Great Depression on job creators," said Sen. Lamar Alexander, R-Tenn.

Alexander has introduced a GOP version paid for by eliminating a preventive health fund created by President Barack Obama's 2010 revamping of the nation's health care system. Republicans are demanding a vote on their alternative measure.

Republicans touted a letter sent to Senate leaders last week by 37 groups representing businesses from architects to wine wholesalers, saying the Democratic plan would be "less clear and less enforceable" than current law but could also end up increasing payroll taxes on businesses already complying with the law.

The election-year standoff affects 7.4 million students, whose Stafford borrowing costs would rise by an average $1,000 over the lives of their loans if interest costs doubled.

The White House has threatened to veto a House-approved GOP bill similar to Alexander's. Administration officials and congressional Democrats say they oppose cuts in preventive health programs.

With presidential and congressional elections in November, neither party wants to be seen as causing students' college expenses to grow. Because neither appears to have the 60 votes needed to push its version through the Senate, it seems likely they will have to find a compromise way to pay for the effort.

Stafford loans are made to low- and middle-income students. The Department of Education estimates students will borrow $31.6 billion in Stafford loans in the year beginning July 1, average $4,226 for each student.

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Comments

[nearfall3]

04:42 PM on 05/17/2012

Hello Alan Fram,

I agree with the point that you made where many students will be affected who take out Stafford loans.I also feel that with the interest rates on student loans set to double on July 1 it will make it even harder to pay off those loans, and also make the decision harder on those who must choose whether to attend college or go straight into the work force.

Would you mind reading my blog at http://tommykilbane.blogspot.com/? I would like to have your perspective.

Tommy Kilbane
[e-mail]
The Green Room at Ohio University

[jadada2]

09:50 AM on 05/08/2012

The problem with the high cost of education is the educational institutions themselves. For some inexplicable reason they hike the tuition on their students. These institutions are not going broke and surely, they aren't losing any money. Every time money is made available to students for their college expenditures. Tuition is raised. Go figure.

[JubalTHarshaw]

03:39 PM on 05/08/2012

Colleges aren't charitable institutions. Your belief that tuitions are raised simply because institutions enjoy doing so is infantile at best. Are you under the impression that you are owed a college education? What have you done to earn it?

[sidecarman]

09:48 AM on 05/08/2012

college tuition should be free to the 99%

[chinagate]

09:42 AM on 05/08/2012

The Democrats and liberals have chalked up another entitlement...to break private loan contracts, and have govt. then forgive them. Who pays, well it's the same old Democrat communist philosophy, govt. ownership of student debt to be paid by those most able for those most in need. How many times are we going to "soak the rich", now the middle class, before Democrats achieve their ultimate dream of a Soviet era communist state in America. We are almost there because of these shameless Democrat communists...and they never quit, program after communist ideology program.

[stape45]

09:54 AM on 05/08/2012

Conservatives invest in Wall Street; Liberals invest in Wall Street AND their government. Conservatives want a return on their investment - the bigger, the better. Liberals feel the same way about OUR investment in OUR government. What part of that do you find so unacceptable, and how do you justify one, but not the other?

[chinagate]

10:01 AM on 05/08/2012

Yeah, that's what Joe Stalin said before he destroyed Eastern Europe..keep spinning

[QueenLibby]

08:17 PM on 05/15/2012

A wallstreet investment has a gamble on winning a govt. investment pays loosers, with no return to the investor.

[FreeUSAnow]

08:33 AM on 05/08/2012

Just wait and see. Obama will at the ease of signing a paper allow kids to write off all or most of their educational debt. The tax payer will be in it again or he will remind the 1% that it is there duty to pay for the next generations education. This will ensure that he gets at least 85% of those affected votes. Just sit back and watch.

[lonestarlady36]

09:30 AM on 05/08/2012

enter stage left, violins. . .

[stape45]

10:03 AM on 05/08/2012

He will get the votes that he deserves. Personally, I WANT some of MY tax dollar to help people in areas where I personally don't need the money myself. I'm not against everything that doesn't benefit ME. America consists of much more than just ME. You know, 1% of the 1% doesn't even feel the way that you do. Do you feel that they should be as selfish and uncaring as their peers? And if so, why?

[QueenLibby]

08:22 PM on 05/15/2012

Honey, How much money could you send me right away ? I could use whatever you can spare.........please state how much I can count on you for......QL

[ProRanger7777]

08:19 AM on 05/08/2012

Do people realize the dangers of what this guy is proposing with all this? HE was the one that said % rates would go up in 2013. And now because its an election year, he wants to look like a hero and that HE will cut % rates. Wrong Barry. The Repubs who were against your raising them in the first place are saying that if you are gona cut% rates, you must do it for old loans as well, not just new ones. He's done the same garbage with home mortgages. Myself and many others break out butts working, cutting costs, watching bills, so we can PAY our mortgages. Yet he is saying to those that werent responsible, "here you go, heres some cash" . And those of you suckers who work hard and scrimp and pay your bills, keep it up, so I have more places to tax. This guy rewards bad behavior, and punishes good. So my daughter, who owes thousands, gets no break, yet someone starting tomorrow does? WOW! Now thats real change. I hope young people are waking up to this guy and his snake oil. Look at the taxes taken out of your small checks, how hard you work, and for what, so Barry can take more to give to those who dont? Wake up before its too late.

[bccpn]

07:58 AM on 05/08/2012

Obama bragged about the dream act funny how it was a GOP bill tabled by Reid so it did not affect his re election. Nothing but lies from this administration spinning the facts. The Ryan plan will be adopted at some point we have no choice.

[QueenLibby]

08:25 PM on 05/15/2012

Right On

[bccpn]

07:55 AM on 05/08/2012

Obama wants free schools and free HC do you see a pattern? Socialism last on average 60 years but the democrats always say they did it wrong we will do better we will throw more money at it. What they do not see is they have no money

[Sral Rolyat]

08:08 AM on 05/08/2012

Supply side economic policies took less than 30 years to destroy our country.

[Sral Rolyat]

08:29 AM on 05/08/2012

Neither medicine or education follows market principles. "No doctor I will forego the emergency heart surgery; the market price is unusually high right now, but I will pick up a couple of those kidneys for later because they are a good value this season."

Most succesful nations in the world (ones that score higher than the U.S. in virtually every measure of quality of life, political freedom, and civil liberties) are mixed market economies.

THe question has never been whether we should choose capitalism or communism.

THe question is: What is the role of the market in society?
How much socialism and how much capitalism is the right balance?
What is most conducive to a healthy, educated, free society?

When we run prisons for profit (and imprison more of our citizens than any other country in the world)
When we no longer see education as having value outside the profit it generates.
When we let people who have served others their entire lives die without proper care because they made "bad choices" and did not pursue self interest and accumulate wealth.

When we let the market determine our values and our humanity.

Then we have gone to a place too far.

We have arrived.

[bccpn]

07:53 AM on 05/08/2012

Paying back a loan is over a 10 year period and they article says it will add $1,000 to the loan. Gas prices going up over $ 4.00 add $1,700 to our cost per year but Obama thinks that is okay

[bccpn]

07:50 AM on 05/08/2012

Economy recovering? A labor force the same size it was in 1982 is not recovery. 6.3 million people not being shown not working by this admin and a real UE of 14.6% is not close to a recovery. No growth and the market showing signs that is will drop because it has no real base to support 13,000. Obama is in deep trouble the numbers are coming out that prove he is incompetent and did not do the job he said he could do when he was elected. 4 years of blame and one of those years doing nothing but work on HC. Even senior democrats in the senate and congress are calling his action a show of bad leadership

[bccpn]

07:45 AM on 05/08/2012

Democrats reduse to see every time the loans are increased the schools raise tuition. The GOP plan freezes the the amount you can get and schools will be forced to do the same or lose enrollments. School administrators making up to 400k a year has to end. They do not deserve that kind of money but just like congress they control their pay scale.
Students getting into the medical field and engineering not liberal arts and advanced basket weaving would give them the job and pay to pay back their debt.

[bccpn]

07:39 AM on 05/08/2012

Obama wants to just dismiss defalted loans after 10 years. So I can send my daughter to a good school then just ignore the loan and it will be wiped off. Do democrats understand the financial mess they have placed us in with their policies? Please do not reply back to me and say it was GWB or the GOP that will only show you have no idea what your're talking about .86 million people out of work proves my post

[bccpn]

07:33 AM on 05/08/2012

Democrats were willing to use the exact same funds for silly programs but now block the GOP from using them. Someone needs to tell them the money tree is like the Christmas tree at the WH, dead

[bccpn]

07:31 AM on 05/08/2012

From 2007 to 2012 record numbers of people having PHDs are on food stamps. And OWS member was on Hanity and said he is using his loan to live on. Hanity had him back on his radio show and offered him a job he turned it down because it did not start at 80 to 100K, The only experience the guy had was woring for a paper clip company. The feds looking into what the money is being used for would cut millions. These kids want the easy way in school and expect the max in the job market. Liberal arts is not a good career move.

[JubalTHarshaw]

07:28 AM on 05/08/2012

"As the economy continues to recover, and at a time when market interest rates are at historic lows, students who rely on loans to finance postsecondary education should not be burdened with additional college debt," the White House said.” That’s one of those wonderful warm and fuzzy statements that makes some folks say “How could anyone disagree with that?” True; until you start to do the math and ask the real question: “Who should be burdened with the cost of that debt?” Some folks don’t seem to understand that the government relies on a portion of that revenue to keep functioning. If we aren’t going to raise the money from the interest payments, that money is going to have to come from someone. Will we be told that those of us who are already bearing the brunt of the federal tax burden haven’t been “fair” enough? It’s time to make Mr. Obama speak openly and honestly about what the cost of his programs actually is. We have been repeatedly told that he has “revenue neutral” programs. Once they are implemented we are told that the math was a little fuzzy and they are actually going to cost us billions. This isn’t a partisan issue; it is economics, math and honesty.