Senate Impasse Means Student Loan Rates Will Double Monday
Obama, GOP seek to link rate to Treasury rates, but disagree on formula
Interest rates on federal student loans will double Monday -- at least temporarily.
Congress has passed a series of one-year extensions to a law which cut the loan rate to 3.4%. This year, President Obama and House Republicans proposed different forms of a permanent fix, linking the rate to Treasury rates. The White House version would push rates lower and lock in the rate for the life of the loan, while the GOP version would adjust the rate each year.
Republicans' bill passed the GOP-controlled House, but the Democratic Senate majority rejected a similar proposal, while Senate Republicans blocked an attempt to end debate on a Democratic bill for another one-year extension. Since those votes, the Senate has been preoccupied with the immigration debate, and last-ditch efforts by each party to bring a loan bill to the floor were summarily rejected. As a result, the interest rate will revert Monday to 6.8%.
Fifth District Representative Susan Brooks (R) blasts the Senate impasse as "embarrassing and disgraceful." She says the House bill would take politics out of the equation by tying student loans to market rates. The former Ivy Tech vice president says students should be able to benefit from the same low interest rates as homeowners and car buyers.
If rates rise again, Brooks says, the House bill would protect students by capping the rate at 8.5%. Obama has criticized the GOP formula, arguing rates could end up even higher than the level they'll hit on Monday when rates double.
Senators on both parties are already gearing up for a second round of votes July 10 on competing bills to reduce the rate again retroactively: a second version of Democrats' one-year extension, and a bipartisan bill authored by West Virginia Democrat Joe Manchin attempting another version of a Treasury-linked rate.
Indiana Senator Dan Coats (R) was absent for the votes on the first set of bills, while Senator Joe Donnelly (D) voted to move ahead with the Democratic bill and block the Republican one. A Donnelly spokeswoman says the senator is "disappointed" the House and Senate haven't been able to reach agreement.