House Passes Student Loan Bill That Would Cut Funds From Health Care
The Republican-controlled House of Representatives passed a student loan bill today that would keep interest rates as they currently are while cutting money from the Affordable Care Act. President Obama, though, has vowed to veto the bill due to the provisions concerning the health care bill.
The bill would keep federally subsidized student loan interest rates at 3.4 percent. If a bill to keep student loan rates at 3.4 percent is not passed and signed by Obama, rates would jump up to 6.8 percent July 1.
The looming July 1 deadline, combined with Obama’s campaigning on the issue, has focused attention this week towards the issue of student loans.
The New York Times has more on the GOP bill that passed today:
It’s likely that a deal to preserve the 3.4 percent rate will be made. The only question will be how to pay for it.
The bill, which would strip $5.9 billion from a program within the health care law to pay to keep rates on subsidized undergraduate loans at 3.4 percent, is all but certain to fail in the Senate, where lawmakers have put together their own measure to keep the rate from reverting to 6.8 percent by closing tax loopholes for some wealthy business owners.
But while it has little chance of becoming law in its current form, the bill — the last piece of major legislation passed by Congress before a one-week recess — was an instructive metaphor for the current state of Congressional politics.
As with other measures designed to aid middle-class voters, the fight between Democrats and Republicans was less over the substance of the bill than how to pay for it, with Republicans, as they have all year, looking to cut government spending and Democrats, as been their approach, looking to extract more money from high earners.
But beyond that question, calls for a more permanent fix to the student loan crisis have been echoed. AlterNet’s associate editor Sarah Jaffe has much more on student loans in a piece that ran earlier in the week:
With Romney saying that temporarily extending the low interest rate is a good idea, it's past time for Obama to start calling for permanent low rates. But too many of Obama's solutions simply kick the can down the road. Income-based repayment might make it easier for students to meet their monthly bill, but as they pay smaller amounts each month, interest continues to accumulate and the overall bill gets higher. A one-year fix on interest rates isn't enough, and even the permanent fix does nothing to shrink the size of the overall debt burden—it simply prevents it from getting even bigger.
It may be time for more drastic fixes. Rep. Hansen Clarke, a Michigan Democrat, introduced a bill that would forgive up to $45,000 in student debt after a borrower makes 10 years of income-based payments (no more than 10 percent of income). A petition in support of Clarke's bill has nearly 900,000 signatures. And of course, the Occupy Student Debt campaign is calling for free public higher education, interest-free loans and a write-off of existing debt.