House Republicans change stance, propose student loan interest bill
After Romney endorsement, GOP proposal would fund rate extension from Obama health law money
The U.S. House of Representatives will vote on Friday on a $5.9 billion bill that would use money cut from President Barack Obama’s health care law to prevent interest rates on federal student loans from doubling.
The Republican bill comes as Democrats push for Congress to act to prevent interest rates on federally subsidized Stafford loans from increasing 3.4 percent to 6.8 on July 1.
Obama has been campaigning at colleges around the country for the stopgap, calling on Republicans to agree to prevent the hike. The GOP faced greater pressure on Monday, when its yet-unofficial 2012 presidential hopeful, former Massachusetts governor Mitt Romney, announced that he also supports the intervention.
House speaker John Boehner, R-Ohio, announced the GOP’s move on Thursday at the University of Iowa.
“Some [Republicans] suggest that students like you have to pay more so we can help bring down the deficit,” Boehner said. “Now, think about that. These are the same folks who ran up the deficits for the last decade. They voted to keep giving billions of dollars in taxpayer subsidies to big oil companies who are raking in record profits. They voted to let millionaires and billionaires keep paying lower tax rates than middle-class workers.”
House Republicans would use money from a $17 billion precention and public health fund formed under the Obama health law to pay for the one-year interest rate extension.
The fund, which Republicans have called a “slush fund,” was intended to fund immunization campaigns, research, screenings and wellness education.
The fund currently contains $13.5 billion, intended to last until 2020, according to the White House.
Rates will increase for about 7.4 million people with Stafford loans unless lawmakers vote to stop interest rates from rising.
Education secretary Arne Duncan has estimated that the bill would save students with Stafford loans a few thousand dollars apiece.
Obama gave a phone press conference for college reporters on Tuesday to address his call for action on the matter.
He said that students who take out student loans graduate owing an average of $25,000 a year.
“For a lot of working families, the idea of owing that much money means higher education is simply out of reach for their children,” he said.
He also pointed out that last year, Americans’ collective student loan debt surpassed the volume of their credit card debt.
Obama told reporters that his administration has worked to keep college affordable for all students. He pointed to the extension earlier this year of Pell Grants to $3 million more students.
The White House reallocated $60 billion that would have gone to paying banks to process federal student loans. Of that money, $40 billion was devoted to giving federal Pell Grants to $9 million more college students.
Pell Grants are usually given to students whose annual family income is near or below $30,000. The extended funding is intended to help students whose family income exceeds the usual eligibility threshold and may still struggle to pay for school.
Obama told reporters that his administration was also responsible for extending the American Opportunity Tax Credit.
The remaining $20 billion that would have gone to banks was used to make the tax credit permanent.
The American Opportunity Tax Credit covers up to $10,000 of taxable income for students. It was also scheduled to expire in July.
Obama also said that his health care plan “eliminated a major expense for young people by allowing young adults to stay on their parent’s health insurance plans until they’re 26.”
Besides calling on Congress to prevent student loan interest rates from doubling, Obama said that he is asking that lawmakers act to double the number of work study jobs over the next five years.
He said that he believes in doing everything possible to help “put higher education within reach for every single American student” because college graduates are about half as likely as those who do not have degrees to be unemployed.
“In America, higher education can’t be a luxury,” Obama said. “It’s an economic imperative that every family has got to be able to afford.”
Contact Haley Etchison at [email protected]