House Democrats Introduce (Unfunded) Bill to Prevent Interest Rate Hike

Rep. Joe Courtney (D-CT) introduced legislation (H.R. 3826) this week to keep subsidized Stafford loan interest rates at 3.4 percent indefinitely. The bill was filed on Wednesday, the day after President Obama called on Congress to prevent student loan interest rates from doubling on July 1, 2012 in his State of the Union address

The bill currently faces a doubtful future as there are no proposed offsets to maintain the 3.4 percent interest rate, nor are there any Republican supporters. The bill has nine Democrat cosponsors.

Some estimate that keeping the interest rate at 3.4 percent could cost as much as $5 billion a year, according to Inside Higher Ed. The additional cost is one reason Republicans have expressed opposition to the proposal. 

In a press release, House Education and the Workforce Committee Chairman John Kline (R-MN) notes that Congress "must either allow interest rates to rise on student loans, or stick taxpayers with another multi-billion dollar bill."

"Real solutions are needed to address the problem of rising college costs, not more short-term band-aids," the press release states.

The press release doesn't offer concrete proposals but encourages exploring ways to make college affordable, increasing transparency in the reporting of college costs, and working to remove burdensome federal regulations that could impose higher costs on postsecondary institutions.

Obama's proposal to keep interest rates at 3.4 percent is one of several the administration has put forward to make college and student loans more affordable

3 Comments

  • I think its about time for the "borrowers" to get outraged and fight for the benefit that they are so entitled to!

  • The Republicans are being politically foolish if they do not submit their own legislation to keep the rate at 3.4%, and tie it to cuts within the Department of Ed budget. Congress can roll back GE regulations and get rid of the bureaucrats hired for that boondoggle. Or they can couple cuts to the bureuacracy with cuts to Pell to make up the difference. In any event, there is no way to justify DOUBLING interest rates on students when the likes of Jon Corzine and his fellow MF'ers get to borrow billions at zero to 1%. Don't these people ever use common sense ? Or just political horse sense?

  • I find it interesting that Direct Stafford SUB rates are going to double next year but the silence of aid associations nationwide is deafening. The 10yr rate that our federal government borrows is 1.9% this morning and they will charge our neediest students and families 6.8%. 5% spread charged to neediest students is simply predatory lending. This is inexplicable. Our NJ state alternative private loan offers a 6.6% 10yr repayment rate to NJ families. Did you ever think that an alternative private loan could be a better option for millions of students? Where is the outrage?

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