Federal student loan interest rates will double on July 1 to 6.8 percent – unless Congress takes action.
While that deadline approaches, Speaker John Boehner and House Republicans have been touting their solution, H.R. 1911, which passed the House on May 23, at press conferences and with a video titled “Don’t Double My Rate”:
At a press conference today, Boehner called on President Obama to show “leadership” and press his own party to act by the July 1 deadline. He said he sent Obama a letter to that effect earlier in the morning.
“It’s clear that many Senate Democrats are content to let the interest rates double on college students,” Boehner said. “I think that’s unacceptable – the president called for permanent, market-based reforms and the House passed such a proposal. And now Senate Democrats are actively blocking the president’s plan.”
At an earlier press conference on June 18, Boehner again called out the Senate’s inactivity.
“I don’t know what’s going on, this fake fight that is being picked,” Boehner said. “But it’s not fair to these students [at the press conference] and not fair to students around the country who need to know what the cost of their loans is going to be and what their interest rate is going to be.”
The House bill is a permanent solution, linking the student federal loan interest rate to the 10-year Treasury rate plus 2.5 percent. Each year the rate would reset, but would have a cap of 8.5 percent. It has only been received by the Senate as of June 20.
Both Senate options failed to pass on June 6. The Democrats’ version would have kept the current rate of 3.4 percent for another two years, and a Republican version would have put all Stafford, Graduate Plus, and Parent Plus loans at a 10-year U.S. Treasury borrowing rate plus an additional 3 percentage points.
Obama’s plan would reset federal student loan rates every year, following the market plus .93 percent. The difference is, for each year the loan is obtained, the interest rate would remain fixed for the life of the loan, and for the upcoming year rates would be at 2.9 percent.
However, Obama has threatened to veto the Republicans’ plan, so even if somehow the stagnant Senate were to put politics aside and accept H.R. 1911, it looks like the president would ensure its demise.
