Venango County Tea Party Patriots

A non-partisan, non-profit, non-member, association dedicated to educating the public and promoting the principles of fiscal responsibility, constitutionally limited government and free market economics, and all other lawful activities.

student loans

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Deal Struck on Highways and Student Loans

Senate and House negotiators have struck a deal to combine the transportation reauthorization, student loan bill and flood insurance legislation in a package expected to pass by the end of the week, according to congressional sources.

The package likely represents the last significant burst of legislating before the election, as lawmakers will become increasingly preoccupied by message votes and electioneering in the weeks ahead.

Sen. James Inhofe (R-Okla.) told reporters on Wednesday afternoon details of the deal would emerge later in the evening, just in time to meet a deadline to allow House lawmakers to vote on it Friday before leaving for the July 4 recess.

Lawmakers could not finish drafting the bill in time to post it online by 12 a.m. Thursday, which means House GOP leaders will either have to waive the three-day rule for reviewing legislation before a vote or delay passage until Saturday.

A senior aide familiar with the negotiations said the bill would be posted sometime after 1 a.m. Thursday and lawmakers on the conference committee would sign it later in the morning.

The legislation would maintain transportation funding at current levels through the end of fiscal 2014. It would also extend federal subsidies for college student loans. Rates for Stafford loans were due to double from 3.4 percent to 6.8 at the end of the month without congressional action.

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Reid Offers Deal to Pay for Student Loan Extensions and Transportation

Senate Majority Leader Harry Reid (D-Nev.) said Thursday that Congress should consider combining reforms to pension contributions with a proposed surface transportation bill that appears stalled in House-Senate negotiations.

In a letter to House Speaker John Boehner (R-Ohio) and Senate Minority Leader Mitch McConnell (R-Ky.), Reid said his preference would be for Congress to reach an agreement on transportation funding by itself.

But failing that, Reid said combining an increase in the amount paid for premiums on retirement plans backed by the Pension Benefit Guaranty Corporations with the transportation bill that passed the Senate earlier this year would provide enough money for highway funding and extending student loan interest rates that are set to double in July.

“I read your letter of May 31 to President Obama on student loan interest rates, in which you said, ‘in the interest of finding common ground on a way to pay for a one year extension of the current student loans rate we are open to other solutes that we have all supported in the past,'” Reid wrote. “In that spirit, I want to offer another bipartisan proposal that recently passed the Senate with strong support from Republicans.”

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Student Loan Interest Rates to Double After Election

President Obama’s fiscal 2013 budget proposal would double the interest rate on federally backed student loans from 3.4 percent to 6.8 percent–eight months after the November presidential election.

The White House fiscal year 2013 plan calls for maintaining the current 3.4 percent interest rate for federally guaranteed student loans, but only through July 1, 2013, at which point it would automatically increase to 6.8 percent. Neither the president’s plan nor the Democrats’ legislation would extend the low rate beyond another year.

The president’s budget calls for “Suspending an Increase in Student Loan Interest Rates.” (See page 97).

“Under current law, interest rates on subsidized Stafford loans are slated to rise this summer [July 1] from 3.4 percent to 6.8 percent,” reads the Obama budget. “At a time when the economy is still recovering and market interest rates remain low, it makes no sense to double rates on student loans. The Budget suspends the scheduled increase for the coming year, so that rates will remain at 3.4 percent.”

The Senate bill favored by Democrats states, “in the matter preceding clause (i), by striking ‘and before July 1, 2012,’ and inserting `and before July 1, 2013.’”

The Republican alternative legislation would also extend the low rate for only another year.

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