That is the sound of the can being kicked down the road.“Let’s put this off for a year.” Did you hear that? That is the sound of the can being kicked down the road; the can being student loan interest rates and the kicker being Sen. Tom Harkin, D-Iowa. He is talking about the interest on new Stafford student loans, which has doubled today from 3.4% to 6.8%. This deadline has been known for a year , so why has it taken Congress so long to act on student loans?
The bill that that was touted as bipartisan was the Student Loan Certainty Act, introduced by Sen. Joe Manchin (D-WV), Angus King (I-ME) and Tom Coburn (R-OK), among others. Of course this only had seven co-sponsors with just one Democrat. Some senators thought this bill was giving people the shaft: “Students across this country would rather have no deal than a bad deal.” That was Sen. Jack Reed (D-RI), whose own bill, the Keep Student Loans Affordable Act of 2013, had 38 co-sponsors, including Senators Tom Harkin and Elizabeth Warren (D-MA). Warren, if you remember, introduced her own legislation, the Bank on Student Loans Fairness Act in early May but it only picked up 10 co-sponsors.
Obama’s plan for students is not that different from the House Republican’s proposalOf course, even if the Senate were to come forward with a bill that they could vote on, the Republican-dominated House, who have their own bill, would have to be on board. Speaking on the House’s proposal, Harry Reid had this to say: “The House Republican proposal is a non-starter in the Senate because it would leave middle-class families with the uncertainty of seeing their rates fluctuate wildly year to year, potentially having to pay thousands more from one year to the next.” Then of course, in the scenario that somehow the Senate approves of the Republican’s bill passed in the House, Obama said he would veto it. This comes as disappointment to many because Obama’s plan for students, which he introduced in his last budget proposal, is not that different from the House Republican’s proposal.
The president wants the interest rates tied to the 10-year Treasury rate, just like Republicans and while the Republican plan’s interest rates start off higher, they offer a cap at 8.5%, something the President’s plan does not have. Sen. Joe Manchin’s bill would be capped at 8.25% and Sen. Reed’s bill will allow rates for loans taken out between July 1st, 2013 and June 30th, 2014 to be retroactively set to 3.4%, giving Congress and the President more time to work on the issue. It’s not known how soon they will start working on the issue after the July 4th recess but what is certain is that students and their families will be anxiously waiting for progress as they start taking out loans for another school year.