With the Stafford student loan interest rate set to double on July 1, the administration and U.S. Congress continue to debate how to pay the estimated $6 billion annual cost of postponement to avoid the increase.
On April 27, the U.S. House approved the Republican leadership’s bill (H.R. 4628) to pay for the postponement using an offset from the health care fund created under the Affordable Care Act that covers prevention and public health. House Democrats had proposed to cover the cost of postponement by eliminating certain tax breaks for the oil and gas industry. Meanwhile, on May 8, the U.S. Senate will consider the Democratic leadership’s bill, which would cover the costs by ending a tax break for S corporations. Senate Republicans support the House Republican plan.
Despite the harsh rhetoric—including the White House announcement that President Obama would veto the House bill—there were some hints of compromise. Senate Democratic and Republican leaders are meeting to discuss offsets that might be acceptable to both sides.
The higher education community sent a letter to all House members on April 24 expressing strong support for maintaining the current 3.4 percent interest rate on subsidized Stafford loans. The associations took no position on the offset for the measure, other than to oppose having it taken from other education programs.