The Senate still doesn’t have a deal on student loan interest rates. According to an article by Siobhan Hughes in the Wall Street Journal:
Two separate plans to prevent an impending doubling of rates on certain undergraduate loans failed to pass the Senate on Thursday, and Republican leaders sought to regain the upper hand, saying it was up to Democrats to come up with something that can clear the chamber.
A Republican plan to extend for one year a 3.4% rate on federally subsidized student loans crashed and burned, failing by 34-62. A Democratic plan fared slightly better, but the 51-43 tally showed that support was too little to clear a 60-vote hurdle. The two sides differ on how to pay for the costs associated with avoiding a rate increase, which will take effect by July 1 unless Congress acts.
Both proposals would have capped the interest rate on Subsidized Stafford Loans issued to undergraduate students since the 2011-12 school year at 3.4 percent rate.
The Republican proposal would have paid for the extension by eliminating a fund for preventive health service in President Barack Obama’s Affordable Care Act. The Democratic proposal would fund the extension by eliminating a tax loophole that some companies use to evade payroll taxes.
This actually isn’t a big deal for college students, because, as I’ve pointed out before, since the rate only applies to Subsidized Stafford Loans issued in the past school year, the interest rate hike will result in a payment increase of about $9 a month, at most.
But this represents a real failure of governance. The 3.4 percent interest rate is a policy that politicians from both parties agree on and somehow can’t manage to pass.
The interest rate will increase to 6.8 percent on July 1 if Congress doesn’t find a solution.