GOP pushes market-based student loan rate fix
With interest rates on federal student loans set to double on July 1 unless Congress acts, Rep. Luke Messer, R-Ind., pushed a Republican proposal that would tie student loan interest rates to the government's borrowing costs, rather than setting a fixed rate, in the weekly GOP address on Saturday.
Messer also slammed President Obama for resisting the plan, arguing that the two sides' proposals have much in common.
"The House of Representatives acted - not only to stop the immediate rate hike but also to protect students over the long term. Our proposal will reduce rates immediately for most borrowers and get Washington politicians out of the business of arbitrarily setting interest rates," he said. "Taking the politics out of student loans is a common-sense fix. It's a plan that mirrors a proposal in President Obama's budget. As a matter of fact, one nonpartisan education expert said, and I quote, 'the two proposals are really on the same page.'"
"Unfortunately, rather than seize this commonground and move the ball forward," Messer added, "the president resorted to campaign-style tactics, stepped out into the Rose Garden and denounced the plan."
At the end of May, Mr. Obama said he was "glad" the House of Representatives acted on the issue, but said, "They didn't do it the right way."
Their proposal, the president warned, "fails to lock in low rates for students next year - that's not smart. It eliminates safeguards for lower income families - that's not fair. It could actually cost a freshman starting school this fall more over the next four years than if we did nothing at all."
The president's plan would also peg the interest rate on federal student loans to the market rate, but that rate would remain fixed for the life of the loan, rather than varying annually as Republicans have proposed.
In the Senate, a pair of student loan proposals was defeated this week. One, a Republican proposal, mirrored the bill passed by House Republicans, tying student loan rates to the marketplace. The other, supported by Democrats, would extend the current 3.4 percent interest rate on student loans for another two years. Neither proposal garnered the 60 votes necessary to overcome a procedural hurdle.
In his address on Saturday, Messer accused Senate Democrats of voting to defend the status quo. "This week, Democratic leaders in the United States Senate tried to take the easy way out and maintain the status quo, which will only hurt students in the long-run," he said. "After the usual noise and bluster, they failed to pass any legislation that would help student borrowers."