Republicans demand action on student loan interest rates
July 6th, 2013
06:00 AM ET
10 months 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. Anonymous

    The Republican Party... never mind. I vomit in my own mouth when I even just utter that phrase...

    July 6, 2013 02:08 pm at 2:08 pm |
  2. MaryM

    Wow, another GOP liar. I am shocked I tell you, Shocked!!

    July 6, 2013 02:09 pm at 2:09 pm |
  3. dang ol' yo

    College should exist only for people who can afford it. Everyone else should be funneled into mandatory training in retail, food service, and call center technology....the jobs of the future. They should be taught to say yes sir, yes ma'am, and to give proper change. They should be taught to do as they are told by their superiors, without asking questions. They should be taught that they're not being paid to THINK, they're being paid to DO. Leave the thinking to those in the upper classes who know what is best. Then, the job creators will have a good, solid, reliable, subservient laboring class, which will make it easier for them to do what they do best....create jobs and make money.

    July 6, 2013 02:16 pm at 2:16 pm |
  4. John

    We need college graduates it is appalling that politicians can't even work together to help them. I have a great deal of trouble believing the non-cooperation is the Democrats fault though.

    July 6, 2013 02:20 pm at 2:20 pm |
  5. philip

    They do not realize how repulsive it is to hear them 'demand action' on loan rates when millions of us have been out of work for a very long time, and these jerks have not once 'demanded action' to help us in any way.

    July 6, 2013 02:22 pm at 2:22 pm |
  6. MashaSobaka

    Republicans demanding action. Ha. Thanks for the laugh.

    July 6, 2013 02:22 pm at 2:22 pm |
  7. The Contentious Otter

    So now the GOP is trying to blame Democrats for inaction on the student loan bill, when it was Senate Republicans who filibustered debate on that bill?

    This represents new heights in GOP stupidity. You have Republicans trying to blame Democrats for something that Republicans did, and the only reason that Republicans are doing that is they know that the Tea Party base is so incredibly stupid, and so conspiracy-theory oriented that they'll just believe whatever the right wing media machine tells them.

    July 6, 2013 02:27 pm at 2:27 pm |
  8. Greenspam

    As a Republican, I say we should tie Obamacare to this bill. If students want low rate loan, then they can't get Obamacare. And leave tax cut alone!

    July 6, 2013 02:34 pm at 2:34 pm |
  9. Michael Benjamin

    Either one is committed to providing a means to afford college or one is not. Tying rates to Treasury notes does not guarantee a stable or affordable rate. Rates have been historically low for the few years, but everyone knows it's just a matter of time before that will no longer be true.

    If the future rests with the next generation don't we owe it to ourselves to give them the best advantage possible. Too much has been made over these Stafford loans. There are other college loans with much higher rates yet no mention about those. As usual, politicians do what they always do, politicize everything to gain advantage.

    Liberals and conservatives will never agree which is supposed to lead to a measure of compromise. If it is true the current programs are returning $50 billion a year to the treasury, maybe we ought to think about using that money to restructure our higher education systems?

    July 6, 2013 02:35 pm at 2:35 pm |
  10. Frank J

    You know, it really cracks me up...people who think there are fewer rich democrats than rich republicans! The democrats are the ones RUINING this country...they're just a little sneakier about how they phrase things. If you want to live in a SOCIALIST America with a bunch of rich elitist democrats at the head of it – then keep right on voting for the democrats!

    July 6, 2013 02:36 pm at 2:36 pm |
  11. Rob1961

    If the Republicans wanted to lower the rates back to what they were, they should stop trying to add a "poison pill" to the legislation that they know they wouldn't be able to get on it own! If you want the definition of "two-faced", look up the word Republican, sub-heading Boehner!

    July 6, 2013 02:42 pm at 2:42 pm |
  12. Steve in CT

    Every Jobs Bill Passed by the Republican controlled House has started with more tax cuts for the rich. The rich don't drive the economy, the middle class does.

    July 6, 2013 02:42 pm at 2:42 pm |
  13. Liz

    The new doubled rate for taxpayer subsidized loans has risen to the same 6.8% rate that unsubsidized Federal loans have for undergraduates whose parents are middle class taxpayers. This is also the same rate charged to graduate students for Federal unsubsidized loans. Parent loans for middle class students remain at 7.9%. Why do students who sit in the same classrooms have their taxpayer paid grants and subsidized loans paid by the middle class families, while the taxpaying middle class families are stuck with the same 6.8% that is causing such an uproar? Once both students graduate and go to work, one student has had a 3.4% rate for the life of the loan, plus had the taxpayers pay their interest (the "subsidized loan" means we pay the interest for these students) while they are in school. The unsubsidized loan has all along had the higher interest rate, and the interest was charged from Day 1 of the loan. Both of these students pay back their loans over 10 years or more, but the subsidized loan has had half the interest charge, and didn't start with a larger debt when the accrued interest was capitalized (added onto the original loan). If both students borrowed $5500 per year for 4 years, the subsidized loan has a balance of $22,000 at graduation and has had an interest rate of 3.4% ongoing for the repayment period. The unsubsidized loan recipient owes the same $22,000 of principal, plus the accrued interest from Loan year 1 of about $1496 (5500 x.068 =374 per year x 4 years = 1496) from Loan Year 2 interest accrued of $1122, Year 3 interest of $748, and Year 4 interest of $374. Total accrued interest of about $3740. So the second student, from a middle class family who was penalized due to his/her parent's income now owes $25740 and will pay 6.8% for the life of the loan. The subsidized loan recipient (who also likely received taxpayer funded Pell and other grants) owes the original $22,000, and has had a 3.4% rate for the life of the loan. It has been hard for the unsubsidized loans to be paid down with a double rate and the accrued interest charged adding to the base loan amount before the double rate. If the unsubsidized loan recipients have to pay 6.8%, then the subsidized loans can pay the same when they are in repayment. Lower the rate for everyone. OR charge a lower rate for STEM majors, or zero interest for these in-demand majors, particularly those for which tech companies are importing H1B visa employees. Penalizing students for 10-20 years of repayment, because their parents earned enough income to bump them above the level for subsidized loan rates is unfair.

    July 6, 2013 02:47 pm at 2:47 pm |
  14. Bob Lewis

    Why would the GOP want anyone to go to college?

    July 6, 2013 02:47 pm at 2:47 pm |
  15. Fearless Freep

    billfit

    Shameful REPUBLICANS . They want to make it as difficult as possible for anyone to reach the middle class. Their motto is to keep everyone poor and uneducated, so that the masses will not be intelligent enough to know that they are being conned by the wealthy REPUBLICAN elite. So sad that people are so gullible.

    Fixed that for you free of charge.

    July 6, 2013 02:48 pm at 2:48 pm |
  16. John

    So according to this story, the real problem his is there is conflict within the democrat party. The president, wants it one way, and other party members want it the other. So how is this a problem caused by the republicans when they are the ones working with the president, who is the party leader?

    July 6, 2013 02:49 pm at 2:49 pm |
  17. Vern

    How typical of The Party of No. They cause the "crisis", and then they scream and yell that it's someone else's fault. The GOP had MONTHS to move on this issue, and didn't do so. So, only the most rabid Tea Party apologist will buy that line of manure.

    July 6, 2013 02:50 pm at 2:50 pm |
  18. MIchael

    This is too rich. The GOP wants action? They care about education and student loans?

    Wow, it doesn't take much at all to figure out they wouldn't be saying a word about it if they thought there was any possibility action actually could be taken to fix it.

    July 6, 2013 02:56 pm at 2:56 pm |
  19. Ulysses

    Let's raise the income tax rate of college professors to 50%, since they preach higher taxes anyway. And use those additional tax revenues to help the students pay down their debt.

    July 6, 2013 02:57 pm at 2:57 pm |
  20. Dan

    Why don't they just agree to subsidize low and middle income student loans to the same extent that they subsidize the education of the children of wealthy students through tax write-offs? Oh, I forgot. Most of them are wealthy.

    July 6, 2013 03:03 pm at 3:03 pm |
  21. DPB

    Public student loans should only be granted to students a public universities. You wan ivy league pay for it out of your pocket.

    July 6, 2013 03:06 pm at 3:06 pm |
  22. DPB

    Democrats in the senate are only worried about shoring up more illegals to vote for them. Amnesty passes like greased lightning...but they can't vote on jobs bills, they have only passed one budget in 5 years and their on gun control bill fails flat on it face. Any yet these bloggers blame the republicans for every problem in this nation...when we finally collapse (not if...but when)...I hope you people will wake up then....

    July 6, 2013 03:09 pm at 3:09 pm |
  23. DPB

    What ever happened to kids working their way through college...don't say it can't be done...I did it...graduated owing nothing...borrowed nothing...family gave me nothing...I did EARN several academic scholarships because I applied myself...better person for it today...not a stay home and blame everybody for my problems...

    July 6, 2013 03:10 pm at 3:10 pm |
  24. Dianne Fix

    Squeeze the students more by raising the interest rate for students taking such loser degrees as Women's Studies, sociology, etc.. The degrees are completely worthless.

    July 6, 2013 03:17 pm at 3:17 pm |
  25. truthandreason2

    People should not have to pay for college, the government should pay for it by taxing the rich at a higher rate. Everyone should get a free education paid for by the top 1%. It is only right. If tuition goes up, we should just tax the rich even more. And I think all these current loans should be forgiven and wiped clean. Maybe one big flat tax on the rich can cover that, then start taxing them at say 70% on an ongoing basis. And the only students that should have to pay for tuition are the offspring of the 1%.

    July 6, 2013 03:28 pm at 3:28 pm |
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