House Approves Bill Heading Off Loan Rate Hike
The House of Representatives voted today, 215-195, to approve a bill that would keep rates on some student loans (subsidized Stafford Loans, to be exact) from doubling on July 1—a priority of President Barack Obama that Gov. Mitt Romney, the presumptive GOP nominee, has also embraced.
So does this mean the debate was a big bipartisan love-fest? Not so much. In fact, the White House has threatened to veto the bill.
The controversy comes not in the plan to keep rates stable, but in how the House legislation, which was sponsored by Rep. Judy Biggert, R-Ill., proposes to cover the $6 billion pricetag. The bill would slash a fund set up under the Obama administration's signature health care overhaul law that is dedicated to preventive care.
"This is a politically motivated proposal and not the serious response that the problem facing America's college students deserves," said a statement from the Office of Management and Budget on the bill.
Many House Democrats agree. They would rather tap oil subsidies to pay for the plan. Senate Democrats, including Sen. Tom Harkin, D-Iowa, the chairman of the Senate Health, Education, Labor, and Pensions Committee, have their own ideas for how to pay for keeping rates stable, which include changing the tax rules for certain small businesses, so-called S corporations, which pass their income along to shareholders for federal tax purposes.
The legislation, which 13 Democrats voted to support, had the backing of Rep. John Kline, R-Minn., the chairman of the House Education and the Workforce Committee, and Rep. John Boehner, R-Ohio, the speaker of the House. But 30 Republicans opposed it, including some very conservatives folks, such as Reps. Virgina Foxx of North Carolina and Trey Gowdy of South Carolina.
The legislation has left some education groups in a tight spot—they love the idea of keeping loans stable, but aren't so thrilled with the offset (some might argue that's because it isn't embraced by many Democrats, typical allies of some education associations.) For instance, the National Education Association, a 3.2 million-member union, didn't back the bill.
Neither did U.S. PIRG, which advocates for consumers, including college students. The group has pushed hard to get the rate stabilized.
"The partisan charade puts politics ahead of the interests of students and their families," said Rich Williams, PIRG's higher education advocate, in a statement.
But others praised the overall push to stabilize rates, without weighing in one way or the other on the plan to pay for it.
"On behalf of the millions of hard-working students struggling to pay for college, the U.S. House of Representatives passed the Interest Rate Reduction Act earlier today to help maintain low interest rates for federally backed student loans," said a statement from the Education Trust, which advocates for poor and minority children. "With similar efforts moving in the Senate, we are pleased to see Congress put politics aside and take the issue of college affordability seriously."