Republicans demand action on student loan interest rates
July 6th, 2013
06:00 AM ET
5 years 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. Gregory L. Faith

    The only one who wins on this issue are the lenders.

    July 6, 2013 12:33 pm at 12:33 pm |
  2. VEW2012

    Another GOP what's new? Frankly, students shouldn't need college loans for those who can maintain a passing grade it should be free.

    Plus, here is where the lying GOP really stands:
    "Senate Republicans stopped the Democratic bill on Tuesday that would keep interest rates on federal college loans from doubling July 1 in an election-year battle aimed at the hearts - and votes - of millions of students and their parents.

    Republicans said they favor preventing the interest rate increase but blocked the Senate from debating the $6 billion measure because they oppose how Democrats would pay for it: By increasing taxes on high income earners.

    GOP senators want a vote on their own version heading off the interest rate increases and paid for it by eliminating a preventive health fund created by President Barack Obama's 2010 health care overhaul. That financing idea has no chance of passing the Democratic-run Senate and has drawn a veto threat from the White House.

    Personally....we need to vote the GOP House in 2014.

    July 6, 2013 12:35 pm at 12:35 pm |
  3. concernedcitizen

    My impression of a college student:

    "I want everything free because my parents have always paid for everything, and I don't understand loans, and I think it's unfair I have to pay it back after I graduate with my Liberal Arts degree in Advanced Basketweaving. I don't think I should be held accountable for an agreement I signed, because even though I'm a legal adult, I have the emotional and mental maturity of a twelve-year-old.

    I believe in socialism because my liberal professors said everything should be free because of oppression of the masses and something or other. WHERE'S MY FREE MONEY?"

    July 6, 2013 12:37 pm at 12:37 pm |
  4. Old white conservative strait male.

    How a progressive democrat read this article: Bla, bla, bla, bla, bla, bla, bla, bla, bla, and the "Republicans continue to insist that we reduce the deficit on the backs of students and middle-class families,"

    July 6, 2013 12:38 pm at 12:38 pm |
  5. Thinker

    The republicans must be kidding. They refused to do anything to prevent this, and now they are trying to be hero. Can't wait for 2014 to throw these losers out.

    July 6, 2013 12:38 pm at 12:38 pm |
  6. Jackie

    If they say it we believe it. It is just to funny the way Republicans take Americans to be totally stupid. All we have heard is Obama yelling about getting the Student Loans fixed before July 1st. Boehner said it was not on his schedule and Congress had other things to vote on. Well looking at the Congress website they voted on a duck on a stamp. Still Obama calling for Congress/Senate to quickly get on the issue of the Student Loans was Congress/Senate left for vacation again. We do remember the Sequester and how Congress rushed to vote to get the flight delays fixed when corporations demanded it fixed. But not one Congress person cared that July 1st the loans increased. But notice Congress ran to pass the bill to give Banks a bailout with interest on loans of .000078% less the a penny on a dollar of taxpayers money. As Republicans told the voters if they elected Obama for a second term nothing would be done and they have kept that promise.

    July 6, 2013 12:39 pm at 12:39 pm |
  7. Pablo

    The US makes it very difficult for the poor and middle class students to get an education. We are behind about every industrial country in the world. An educated populace makes a country strong in many ways and prepares it for the future. As a nation, we will pay for this serious mistake.

    July 6, 2013 12:45 pm at 12:45 pm |
  8. Ed

    Dems are right. Student loans should cover admin costs but not pay down the deficit. Students didn't rack up the deficit. Free lunch tax breaks for the wealthy over the last decade racked up the deficit so only those who benefits directly should pay to bring it down. That means financial firms, real estate firms, insurance firms, and manufacturers that pocketed the money in exec pay or shipped it overseas.

    July 6, 2013 12:46 pm at 12:46 pm |
  9. Loki

    so the most this is going to cost anyone is about 41.25 per day

    July 6, 2013 12:47 pm at 12:47 pm |
  10. Loki

    that's $1.25 per day

    July 6, 2013 12:49 pm at 12:49 pm |
  11. Ed

    Supposedly loan rates for different purposes are tied to risk. It would be good to see default rates on student loans vs car loans, primary mortgages, investment property mortgages, and various business loans to see if default metrics actually go with interest rates (or if, as I suspect, they go with influence and wealth). You can get away with charging a student 7% because they have so few assets they don't have any recourse. It has nothing to do with risk of paying off because a business speculator who does appear to have assets often has assets that are not liquid or have volatile values and yet can get loans at a lower rate.

    July 6, 2013 12:50 pm at 12:50 pm |
  12. sundownr

    I have always believed the current student loan programs were a 'bait and switch' operation conceived by banks and Congress... remember student loans exceed America's credit card debt and is a gold mine because the IRS will help to collect. They might just as well have said, "I've got you sucka".

    July 6, 2013 12:50 pm at 12:50 pm |
  13. yogi

    The MO of republicans is stupidity and greed. Yes, you can "let the free market decide", if your parents are wealthy when the rates become sky high, but you screw the middle class. The immigration bill will get killed in the House, and the Hispanics won't forget that in the next general elections. See how busy the GOP is on a state level with their anti abortion legislation? See how busy they are opposing gay rights? See how they oppose equal pay for women? The earth is 6000 years old? The list goes on and on: Stupidity and greed.

    July 6, 2013 12:52 pm at 12:52 pm |
  14. Italmn

    I am amazed but NOT SUPRIZED at all about this. Republicans still trying to force their agenda(S) on everyone. The only thing they want is to turn This issue over to Wallstreet when they say they want a more FREE market ? LOL...That's exactly what they want with Social Security, Medi-Care, Education ect. What a total joke. The people of this country are totally aware of what they are up to. NEVER going to happen.

    July 6, 2013 01:01 pm at 1:01 pm |
  15. aaron

    Just more Repub grandstanding. If rich people's kids had to get student loans to go to college, they be at 0% interest rates, with the debt forgiven at graduation. For any one else's kids, they couldn't care less if they got an education or not.

    July 6, 2013 01:02 pm at 1:02 pm |
  16. Anonymous

    Once ... just ONCE, couldn't congress do the right thing BEFORE it's deadline passes? Republicans and Democrats agree on very little, yet they both agreed that this issue needed to be addressed and solved by LAST week. Yet the rare agreement wasn't enough. It's still more important to score political points against the other side than do the right thing.

    July 6, 2013 01:03 pm at 1:03 pm |
  17. billfit

    The Demos. will never stop their lie, cheat, and steal tactics. It's like a terminal disease.

    July 6, 2013 01:04 pm at 1:04 pm |
  18. Italmn

    Thank God Romney & Ryan did NOT get into power or we all would be sunk. Wallstreet needs to stick to stay OUT of social programs. We now have Watch-Dogs making sure they tow the line thanks to the POTUS enforcing it.

    July 6, 2013 01:04 pm at 1:04 pm |
  19. Former Republican, now an Independent

    This is definately a smokescreen from the GOP, who don't really care about students who need loans. Most of their wealthy contributors do not need student loans for their children.

    July 6, 2013 01:08 pm at 1:08 pm |
  20. spencercourt

    How is it that "small government" Rep;ubs can support any type of student loans at any rate other than "market" rate? Subsidized loans are just another rathole for taxpayer dollars to disappear down. If an education is worth it, then the student should pay ALL the costs. And yes, I went to 16 years of PRIVATE school and NO financial aid for the four years college of PRiVATE college. If you can't afford it, don't buy it!

    July 6, 2013 01:08 pm at 1:08 pm |
  21. Francisco Decastro

    I need actions on my student loan. If they can help us give us more loans, with less or no interest that would be great. They should be able to continue to give student plenty of loans who have good grades, because one day I will graduate, and work for this country, pay taxes, and employ people who will pay taxes. If we show that we are working hard, with our grades and our GPA, I think we deserve it.

    Give more loans to students who deserve it with little to no interest!!!!! ALSO GIVE PLENTY OF FINANCIAL AID to people like me who gets paid $8.75 an hour working 20 hours a week or less who can't even afford to go out to eat with friends after paying the car bill, car insurance, gas, and cell phone.

    July 6, 2013 01:09 pm at 1:09 pm |
  22. Colin

    The government invested billions to bail out the failing auto companies. Why not bail out college graduates? There would be a big economic stimulus!

    July 6, 2013 01:10 pm at 1:10 pm |
  23. blakenaustin

    The more important question is "why is Uncle Sam involved in the student loan business". Just another example of the federal government becoming far to big and powerful.

    July 6, 2013 01:12 pm at 1:12 pm |
  24. Dan

    Adjustable rate loans are a horror. Cap the loans at a reasonable rate and be done with it.

    July 6, 2013 01:13 pm at 1:13 pm |
  25. John

    You have got to be kidding me. House Republicans will trot out *anyone* to say *anything.* These guys invented cliffs and deadlines, and intractable positions on things that should be very, very simple. Give our kids a break, for crying out loud.

    July 6, 2013 01:18 pm at 1:18 pm |
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