Senate Leaders Agree on Bill to Extend Student Loans

The $6.7 billion agreement would extend the current 3.4 percent rate on Stafford loans for one year, with about $700 million extra for deficit reduction, according to Senate leadership aides. The bulk of that — $5.5 billion — would come from two pension measures. One would change how private pension interest payments are calculated, smoothing the fluctuations for businesses even as the total cost rises slightly. The other would come from higher premiums for companies participating in the Pension Benefit Guaranty Corporation.

Another $1.2 billion would come from limiting how long a student could receive Stafford loans to 150 percent of the average time it takes to complete a degree. Currently there are no limits.

“We’re pleased that the Senate has reached a deal to keep rates low and continue offering hard-working students a fair shot at affordable education,” said the White House press secretary, Jay Carney.

Senator Mitch McConnell, Republican of Kentucky, the minority leader, said the White House was not involved in reaching the compromise.

Attention will now shift to House Republicans, who already passed a loan extension, paid for by a preventive care fund from the health care law that Democrats had declared unacceptable.

House Republicans huddled with Speaker John A. Boehner of Ohio on Tuesday evening, trying to find a way to link the loan deal with a measure extending federal highway and transit programs. The goal, aides said, was to be able to take a final vote on Friday, ahead of the July 4 recess.

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Some Democrats Make Student Loans a Campaign Issue

With federal college loan rates set to double in less than two weeks unless Congress takes action, some Democrats are using the time until then to draw political capital from the hot-button issue.

The government-funded Stafford loans that are in limbo currently have an interest rate of 3.4 percent; the rate is set to go to 6.8 percent on July 1. Although many Democrats and Republicans agree that the rate should remain where it is, the parties haven’t been able to reach consensus about how to offset the cost.

Republicans have proposed taking money from the health care law and passed a bill in the House to that effect, in spite of warnings by President Obama that he would veto it. Democrats have proposed eliminating a loophole in Social Security and Medicare taxes for some high earners. Each side has accused the other of obstruction.

With progress stalled on Capitol Hill, some Democratic candidates have, in the same vein as Mr. Obama, taken the fight to the campaign trail to raise money and curry favor with voters.

Representative Tammy Baldwin, of Wisconsin, spoke about the issue at a stop in Madison, which is home to the University of Wisconsin’s flagship campus. Representative John F. Tierney of Massachusetts, who sponsored a version of the college-loan legislation in the House, e-mailed a video to constituents. And Paul Hirschbiel, a Democrat who is challenging Representative Scott Rigell in Virginia, appealed to supporters to “tell Congress to stop playing games with our children’s future” by donating to his campaign.

Republicans, meanwhile, have chided Democrats, saying that they defend the health care law at any cost.

Andrea Bozek, a spokeswoman for the National Republican Congressional Committee, said the student-loan debate was an example of how policies backed by Democrats, like the health care overhaul, ultimately “have left college students with fewer job opportunities and more student loan debt.”

The underlying issue is not trivial: According to the most recent numbers released by the Department of Education, 46 percent of undergraduate students in the 2007-8 school year had at some point turned to the government for a college loan. More students are taking out loans, too: In 1989-90, just 27 percent of undergraduates borrowed money for school from the government.

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Republicans in Senate Block Bill on Student Loan Rates

A Democratic bill intended to prevent the doubling of some student loan interest rates is in limbo now that Senate Republicans have blocked its consideration, Jonathan Weisman reports:

Along party lines, the Senate voted 52 to 45, failing to clear the 60-vote hurdle needed to beat back a filibuster and begin debating the measure. Senator Olympia J. Snowe, the retiring moderate Republican from Maine, voted present.

Republicans said they wanted to extend Democratic legislation passed in 2007 that temporarily reduced interest rates for the low- or middle-income undergraduates who receive subsidized Stafford loans to 3.4 percent from 6.8 percent.

But they oppose the Senate Democrats’ proposal to pay for a one-year extension by changing tax law that currently allows some wealthy taxpayers to avoid paying Social Security and Medicare taxes by classifying their pay as dividends, not cash income.

“They want to raise taxes on people who are creating jobs when we are still recovering from the greatest recession since the Great Depression,” said Senator Lamar Alexander, Republican of Tennessee, who instead wanted to pay for it by eliminating a preventive health care fund in President Obama’s health care law.

What are your thoughts about the Senate’s vote? Should Congress keep the reduced student loan interest rate from 2007, or allow the reduction to expire? Let us know your thoughts in the comment box below.

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Two Parties Find a Way to Agree, and Disagree, on Student Loan Rates

In a second day of campaign-style rallies, Mr. Obama pressed his attack on Republicans, depicting them as unsympathetic to college students in need. Republicans countered by accusing the president and his Democratic allies of playing politics with the issue and trying to raise taxes on small businesses to pay for the subsidized rate.

Caught in the middle were seven million college students who will see the interest rate on their federally subsidized loans double to 6.8 percent on July 1 unless Congress and the White House come together on a plan to prevent that, at a cost of $6 billion. For a typical student, the White House said the higher rate could mean as much as $1,000 in additional debt per year at a time of high unemployment among recent graduates.

Mr. Obama has made the issue his top talking point in recent days as part of an effort to put Republicans on the defensive and duplicate the political success of the payroll tax cut extension last winter. Speaking at the University of Iowa here, he seized on a comment by an aide to Speaker John A. Boehner that the president should focus on fixing the economy.

“This is the economy,” Mr. Obama said with indignation in his voice. “What economy are they talking about? You are the economy.”

Republicans were equally indignant at what they saw as game-playing, saying that they, too, want to forestall the rate increase. They quickly tried to outmaneuver the president.

Late Wednesday afternoon, Mr. Boehner hastily called a news conference to announce that the House would vote Friday on a student loan bill that seemed to take shape just as suddenly. The proposal would extend the current interest rate for federal student loans for one year. The $6 billion cost would be offset by eliminating the remainder of the money from the Prevention and Public Health Fund, a portion of the health care law.

“You know, this week the president’s traveling the country on the taxpayers’ dime,” Mr. Boehner said, “campaigning and trying to invent a fight where there isn’t one and never has been one on this issue of student loans. We can and will fix the problem without a bunch of campaign-style theatrics. “

House Democrats quickly countered that they would offer a bill to maintain the rate by ending tax subsidies for oil and gas companies.

Congress first cut the interest rate on federally subsidized loans in 2007 when Democrats controlled both houses but allowed the cuts to expire after five years because of the cost. The rate moved down gradually each year to 3.4 percent last summer from a high of 6.8 percent. If no action is taken, the rate will jump back up to 6.8 percent this summer.

Mr. Obama included money in his budget to extend the cut, but just for one year. Republicans, in the budget advanced by Representative Paul D. Ryan of Wisconsin, did not finance an extension. But following the lead of Mitt Romney, the party’s presumptive presidential nominee, Republican leaders say they, too, favor extending the lower rate at least temporarily.

“It took me seven years to work my way through college, working every job I could get my hands on,” Mr. Boehner said. “And what Washington shouldn’t be doing is exploiting the challenges that young Americans face for political gain.”

White House officials said the only reason Republicans were speaking out in support was because the president had embarrassed them, and they pointed to a number of past comments by individual members of the opposition questioning the government role in student loans.

Senator Harry M. Reid of Nevada, the Democratic majority leader, introduced a bill to extend the cuts and pay for that extension by preventing some business owners from sheltering their income from Medicare and Social Security taxes.

He plans to hold a vote to try to overcome a potential filibuster, most likely after next week’s recess, giving Mr. Obama a chance to talk about the issue all next week, Democrats said.

Senator Lamar Alexander, Republican of Tennessee, responded with legislation introduced Wednesday to keep the low rate and pay for it by taking money from Mr. Obama’s health care program.

Each plan was devised in a way to make it unpalatable for the other party to vote for it, thus setting the stage for a potentially protracted fight over how to finance the student loan measure. It was a reflection of the fact that Republicans do not want to have the fight Mr. Obama seemed eager for.

“It sounds to me that they know this is not someplace where they want to go,” said Representative George Miller, Democrat of California, who sponsored the original 2007 legislation. “So I think it really is down to how we will pay for it. In this economy at a time when families are struggling and people are concerned about the load of debt, it makes no sense to charge students 6.8 percent.”

Peter Baker reported from Iowa City, and Jennifer Steinhauer from Washington.

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Politicians Find a Way to Agree, and Disagree, on Student Loan Rates

Republicans and Democrats agree: nobody wants to see the interest rates of student loans go up this summer. They disagree, however, about how to cover the costs that would keep that from happening, our colleagues Peter Baker and Jennifer Steinhauer report this week.

President Obama has been touring college campuses this week to promote college affordability, even spreading his message in a slow-jam with Jimmy Fallon. Mr. Obama characterized Republicans in Congress as unsympathetic to college students; Republicans accused the president of playing politics, our colleagues report:

Caught in the middle were seven million college students who will see the interest rate on their federally subsidized loans double to 6.8 percent on July 1 unless Congress and the White House come together on a plan to prevent that, at a cost of $6 billion. For a typical student, the White House said the higher rate could mean as much as $1,000 in additional debt per year at a time of high unemployment among recent graduates.

Mr. Obama has made the issue his top talking point in recent days as part of an effort to put Republicans on the defensive and duplicate the political success of the payroll tax cut extension last winter. Speaking at the University of Iowa here, he seized on a comment by an aide to Speaker John A. Boehner that the president should focus on fixing the economy.

“This is the economy,” Mr. Obama said with indignation in his voice. “What economy are they talking about? You are the economy.”

Republicans were equally indignant at what they saw as game-playing, saying that they, too, want to forestall the rate increase. They quickly tried to outmaneuver the president.

Late Wednesday afternoon, Mr. Boehner hastily called a news conference to announce that the House would vote Friday on a student loan bill that seemed to take shape just as suddenly. The proposal would extend the current interest rate for federal student loans for one year. The $6 billion cost would be offset by eliminating the remainder of the money from the Prevention and Public Health Fund, a portion of the health care law.

(The article goes on to report that Mitt Romney, the Republicans’ presumptive presidential nominee, favors extending the lower rates, too, at least temporarily.)

After you’ve read the full report, we’d love to hear your thoughts. What, if anything, should the government do about student loan rates? Let us know your thoughts in the comment box below.

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