Republicans demand action on student loan interest rates
July 6th, 2013
06:00 AM ET
1 year ago

Republicans demand action on student loan interest rates

(CNN) - Rep. Lynn Jenkins, R-Kansas, faulted Senate Democrats on Saturday for this week's hike in student loan interest rates and urged the upper chamber to pass legislation that resolves the issue as soon as the holiday recess ends.

"For too long, politicians have been in charge of setting these rates, and we keep coming back to cliffs and deadlines like this one," Jenkins said in the GOP weekly address. "Paying for college is difficult enough without all this uncertainty. I have two kids in college, I know how hard it can be."

The interest rates on some student loans officially doubled Monday - to 6.8% from 3.4% - after the Senate failed to reach a compromise by the July 1 deadline.

The hike hits about seven million new subsidized Stafford loans this year for middle- and low-income students, but does 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 Barack Obama and various congressional Republicans, which are tied to 10-year Treasury bond rates and would include charges for administrative costs but would not include caps.

Republicans, who prefer a more market-based approach, often point out that the White House's proposal falls more in line with their own.

"When President Obama proposed letting the markets set interest rates instead, the Republican-led House passed a bill reflecting his plan," Jenkins said. "Republicans in the Senate came to the table with similar ideas. Unfortunately, Senate Democrats attacked the president's plan, refused to work with us, and allowed this rate hike to take effect, leaving for the July 4th holiday without passing a solution."

Senators worked through last week to try to reach a deal, but lawmakers from both parties ultimately predicted an agreement would not be made in time.

Nevertheless, many of those same senators said they hope to finalize an agreement shortly after the break and have it apply retroactively so students are not hurt by the temporary hike.

Another disagreement centers on whether the legislation is revenue-neutral. Senate Democrats say the government should 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," Adam Jentleson, a spokesman for Senate Majority Leader Harry Reid, said a week before the deadline.

– CNN's Ted Barrett and Ashley Killough contributed to this report.


Filed under: Congress • Education • Republicans
soundoff (540 Responses)
  1. BostonBruins02125

    Senator Elizabeth Warren of Massachusetts is right on this issue, not Jenkins!

    July 7, 2013 12:51 pm at 12:51 pm |
  2. jayb18

    Regarding high college costs, for years most federal loans were made by the private lenders backed by the feds. Three years ago, the Obama administration decided that cutting out the middleman...i.e, the private sector was the way to go. So today, the feds are responsible for 9 out of 10 student loans and the default rate continues to rise. The problem is, many of these loans are made w/o any considerations of the barrowers ability to pay them back. The Colleges and universities are not inclined to ask either, because they get the loan money wheather or not the student gaduates. Make the schools pay 50 percent back to the US government if a student fails to graduate or defaults. Things will change very quickly.

    July 7, 2013 12:52 pm at 12:52 pm |
  3. sam

    Smart, intelligent students is a must for this nation to survive, yet the lawmakers downplay education and the cost of education. Cost of loans should be no more than 2%, not 3 nor 6%. When will all politicians understand that a good education is most important. Most of the politicians got there education by using loads, not working their way through college as some Republicans are suggesting. Let the law makers know your opinion by email or phone calls to them. They will finally be back in DC Monday,

    July 7, 2013 12:54 pm at 12:54 pm |
  4. Tom

    We are the Democrat Party. We are the party of "FREE STUFF". All you have to do is vote for us and we'll givee you tons and tons of free stuff. Free Cash Welfare (AFDC), food stamps (EDT), more free food (WIC), free rent (Section 8), College loans at below market rates, and of course, free cell phones. We are the party of FREE STUFF!!! Even if you aren;t very smart you can understand the democrat policy paln....FREE STUFF!!!

    July 7, 2013 12:56 pm at 12:56 pm |
  5. sam

    The Republicans lawmakers are destroy the USPService also. Wanting to do away with our postal service. The Republicans want to turn mail service over to private corporations.

    July 7, 2013 12:56 pm at 12:56 pm |
  6. Jon

    If the Republicans want action (and I'll bet the only reason they want action is that they know opposition will cost them at the polls) then stop talking and ACT.

    July 7, 2013 12:57 pm at 12:57 pm |
  7. Dick46

    The Republican house voted 37 times to kill health care but can't vote once on a student loan plan!? The party of no has no shame.

    July 7, 2013 01:02 pm at 1:02 pm |
  8. shabba shabba

    Why are we charging so much interest on student loans ? Should be 1 or 2% max.You start charging 5,6,7%. And people crap out pretty darn fast. Its not rocket science.

    July 7, 2013 01:05 pm at 1:05 pm |
  9. Bevis

    What about the banks that took kick back points to write last minute loans for students who thought they had scholarship money with acceptance as parents co signed. Many lawyers were telling students the loans were dead issues if they didn't finish college and were litiagatable if co-signers were involved ,or were not enforceable if the co signer was deceased. Now the government program wants millions of dollars in interest years later for default!....right!

    July 7, 2013 01:05 pm at 1:05 pm |
  10. Hawk in Texas

    The republicans are the ones that have blocked every move that the democrats have tried to make for the lower intrest rates and then turn around and try to lay the blame on democrats. all the republicans seem to have voted on is trying to repeal Obama care 37 times. and it's not surprising that there are a lot of posters on here that agree with this tea party nut jenkins that it is the democrats fault. as they have blamed the sesquester on democrats also. like perry and his republican henchmen in texas when the abortion bill was defeated. they changed the rules and tried to make it look like it passed. the republican way lie, cheat and steal if lying and cheating dosen't work.

    July 7, 2013 01:13 pm at 1:13 pm |
  11. cc423

    For the GOP to blame Democrats for this is at best disingenuous and at worst a flat out lie.

    July 7, 2013 01:19 pm at 1:19 pm |
  12. itwasntme

    This is EXACTLY why student loans should NOT be handled by the US government. Let "students" access the free market and get their own loans if they want to continue their education. Get the government out of the business!

    July 7, 2013 01:20 pm at 1:20 pm |
  13. Rosa, b'ham al

    The GOP demands action? Is that supposed to be a joke?

    July 7, 2013 01:26 pm at 1:26 pm |
  14. Venkat

    Why cannot a parent loan his/her ward a loan at zero percent? What can be the answer? Oh.. we don't have the money!
    Why not borrow some from a bank? Oh.. it is expensive.
    Now the question is – where does the money come to all these 'zero interest rate' demanding folks? Federal govt must borrow the money?? Who is going to loan money to the Govt at zero percent? Who is going to loan to a party knowing that about 30-40 percent of the money is going to be written off as bad debt?
    Why not the money demanding folks contribute to the federal govt at zero rate, let the govt give it to whoever and you don't possibly get your money back?
    If it is else's, it is easy to say – give it away for free, if it is yours, you don't spare a dime to anyone!
    Simple human nature at work!

    July 7, 2013 01:36 pm at 1:36 pm |
  15. Getoverit

    @Jules
    Where’s the plan from the House – that’s right – they don’t have one.
    ------
    Did you actually read the article? Nope, didn't think so. Typical.

    July 7, 2013 01:42 pm at 1:42 pm |
  16. Phoenix Justice

    Senator Warren had the best plan for student loan interest rates: Charge the same amount that the Federal Reserve charges banks.

    July 7, 2013 01:42 pm at 1:42 pm |
  17. SMITVICT

    "When President Obama proposed letting the markets set interest rates instead, the Republican-led House passed a bill reflecting his plan." .

    Still waiting on the democrat senate. The do nothing body.

    July 7, 2013 01:44 pm at 1:44 pm |
  18. tom

    We should be blaming the the Federal Reserve and Ben Bernanke. Everything leads back the money and the money is being debased, Politicians will fight to get money only in their pockets. Because they know what lies ahead. Market Crash and the college bubble will crash.

    July 7, 2013 01:48 pm at 1:48 pm |
  19. GOP repubtard

    GOP is the one to blame!!!!

    July 7, 2013 01:49 pm at 1:49 pm |
  20. bill

    I think it is hilarious how every time the GOP creates a problem they turn around and tell the media they "want action." It is a sick joke how the filibuster party screws with America and gets away with it time and again.

    July 7, 2013 02:04 pm at 2:04 pm |
  21. OrionStyles

    Yeah... after hosing students for years under Bush they have the audacity to even speak on this subject?

    Something is wrong when what should be considered an investment is twisted into a predatory loan. It's real simple, a student defaults and the bank makes more money when that happens than if they pay it back under protected low interest. Nothing will go wrong in that situation. :\

    July 7, 2013 02:17 pm at 2:17 pm |
  22. Goaty McCheese

    Hmmm, 6.8%'s still a helluva lot cheaper than mine were. And I still paid mine off.

    July 7, 2013 02:18 pm at 2:18 pm |
  23. PaulCat

    She must be up for reeliction.

    July 7, 2013 02:23 pm at 2:23 pm |
  24. opinion8it

    Big banks own us – good night America.

    July 7, 2013 02:34 pm at 2:34 pm |
  25. mightyduk

    Dems= free stuff ?? One, what new free stuff programs are out there. And two what did G.W. Do about these programs in 8 years?....nothing. Keep listening to fox spews and get dumber but the day.

    July 7, 2013 02:44 pm at 2:44 pm |
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