WASHINGTON – Republican senators yesterday blocked efforts to vote a Democratic-sponsored bill that would have retained the current 3.4% rate on Stafford loans over disagreement between the two parties on how to pay the $6-billion-per-year cost.
The Republicans want to take the money from the preventative healthcare fund in President Obama’s health care program, while the Democrats want to fund it by raising Social Security and Medicare payroll taxes on high-earning stockholders of some privately owned corporations.
The Republican plan has no chance of passing because President Obama has promised to veto it if it gets to his desk.
Without congressional action the rate on the loans to almost 7 million people will double to 6.8% on July 1 because of a 2007 law that gradually lowered the rates. The loan rate is critical to credit unions that set their own student loan rates based on the Stafford rate.
Subsidized Stafford loans are for low- and middle-income students. The higher rates, should they occur, would only affect students taking out new loans starting July 1. The loans generally are paid off over a decade or more after graduation. Allowing interest rates to double would cost the typical student about $1,000 over the life of the loan.
