Washington (CNN) - An agreement to stave off the doubling of interest rates on some student loans is unlikely before a July 1 deadline, despite a late push by a handful of lawmakers to reach a compromise, senators from both parties said Wednesday.
“Time is running out but we’re still working on it,” said Sen. Jack Reed, D-Rhode Island.
Nevertheless, many of those same senators said they hope to finalize an agreement shortly after Congress returns from its July Fourth recess and have it apply retroactively so students are not hurt by the temporary hike.
“It would be retroactive,” promised Sen. Richard Burr of North Carolina, speaking about the tentative agreement he reached with a small bipartisan group of senators but that Senate Democratic leaders oppose.
Rates for the loans in question, government subsidized Stafford loans, are set to rise to 6.8% from 3.4% if a deal isn’t reached. The hike would hit about seven million new loans this year for middle and low income students to pay for college, according to Senate Democrats. It would not apply to existing loans.
Negotiators are stuck largely on the question of whether to require an overall cap above which interest rates on new loans could not rise. Top Senate Democrats want a cap in place to protect students if interest rates spike. That is at odds with the slightly different proposals from President Obama and various congressional Republicans, which are tied to 10 year Treasury bonds and would include charges for administrative costs but would not include caps.
Republicans, who prefer a more market-based approach, were thrilled to find the White House’s proposal more in line with theirs.
“Why Senate Democrats continue to attack the president’s plan is a mystery to me,” said Don Stewart, a spokesman for Senate Republican Leader Mitch McConnell. “But I hope he’s able to persuade them to join our bipartisan effort to assist students.”
Another disagreement centers on whether the legislation is revenue neutral. Senate Democrats are insisting the government not earn any money or pay down the deficit from the loans they provide, something that would happen under the other proposals.
“Republicans continue to insist that we reduce the deficit on the backs of students and middle-class families,” said Adam Jentleson, a spokesman for Senate Democratic Leader Harry Reid.
Sen. Tom Harkin, D-Iowa, who chairs the Senate committee that deals with education policy, is pushing for a two year extension of the 3.4% rate so that lawmakers have time to fully address a host of higher education issues. He also hopes that after senators finish the time and energy-consuming immigration debate, they’ll be able to more fully focus on student loans.
“We probably can’t get anything done this week,” Harkin said Tuesday. “If Republicans will agree to a cap, I think we could get this done in a heartbeat.”
Students should get the same sweetheart loan rates the big banks got: 0.5%
If bankers want low rates NO PROBLEM say conservatives. If Investors want low taxes OF COURSE they are the engine of american growth. Help invest in the nations real future, the education of our children? NO WAY, that's a waste of taxpayer money, those kids should pull themselves up by their bootstraps.
The government is expected to make almost $51 billion in interest off student loans in 2013. I guess that is not enough.
Student loans are nothing more than people "Loan Sharking"–You Bankers and Loan Institutions should be ashamed of yourselves.–Drop those interest rates or better yet lets write the Loans off and let these people get on with their lives. A College Education should be free anyway or at very little cost.
The GOP loathes smart, educated people, because they comprise the Democratic Party base. They need ignorant, low-info voters to sustain their base. That's just the facts.
Don't put yourselves out. Next week all of the republicans can get together and tout higher education, all the while trying to squeeze out as many students as possible through economic terrorism.
It had better be retroactive. America would hate you, Congress, if you actually existed.
Give the future American workforce as much assistants as needed. The country will make a nice profit form the higher wages thes college students will earn over the next 40+ years. Think what would happen if your mortgage interest rate was about to double.
vote the repugs out of office, all of them!!!!!!!!!!!!!!!!
Yeah, its just real people trying to get an education, and having to deal with the nationwide de-funding of higher education all across America by the GOP.
Here in deep-red Arizona in 1980, the state funded more than 80% of university funding, and 90% of community college funding. Today, the GOP has stripped that down to 22% for universities, and 11% for community colleges. This means the GOP has not only driven tuitions sky high, but now they want student to pay payday loan-like rates on the loans they have to have to pay for their education.
I'm sure the GOPpers are saying "why aren't they just borrowing from their parents?".
With education we lack the bills and policies to create a fair and efficient way to even afford college. It would be nice to see some grown up policies that make education a necessity in America without drastic expenses for education.
Students loans should go through the roof. Let these youngsters learn how the world really works. Providing subsidized loans is teaching them not to take responsibility for themselves. Too much is placed on getting an education so one has the opportunity to improve one's lot in life. If one can't pay for it then one can't have it. At one time only the rich could afford to send their children to college. We need to return to those times and values. Enough with this multiculturalism and leveling the playing field.