Congress might be more than a week past the deadline to keep student loan rates from doubling for 7 million students, but the House of Representatives and Senate say they are prepared to retroactively restore lower rates. That is if they can halt the blame game and come to some kind of agreement.
While the House passed legislation months ago to tie the student loan interest rates to the Treasury, Senate Democrats have dug in their heels and demanded a simple extension of the 3.4 percent interest rate.
Senate Majority Leader Harry Reid, D-Nev., announced this week he would hold a vote on a plan that would lock in a 3.4 percent student loan interest rate for one more year until committee hearings could be held to find a more long-term plan. The Senate demanded the same plan last year and won out.
The cost of lowering student loan interest rates would be offset by closing tax loopholes for energy companies. The Senate is expected to hold its first vote on the matter Wednesday, more than a week after the loan rates doubled to 6.8 percent.
House Speaker John Boehner, R-Ohio, unafraid of the election year politicking that forced him to the negotiating table with the Senate last year, signaled Monday amongst a group of college students that he saw no need for the House to go back to the drawing board when the chamber had already passed a long-term plan to stabilize student loan interest rates.
"White House and Senate Democrats have let these students down," Boehner said. "The House has done its job."
Boehner noted that for once, the president and the House of Representatives seem closer to a deal than Senate Democrats and House Republicans.
"If you look at what the House passed, it is very similar to what the president offered in his own budget earlier this year."
The House plan, the Smarter Solutions for Students Act, links the student loan interest rates to a market-based rate plus an added 2.5 percent and dictates that the interest rates may never climb past 8.5 percent. The rates, however, would be adjusted annually and could vary throughout a loan's life. The president also suggested that rates be connected to Treasury notes plus an added .93 percent for need-based loans and 2.9 percent for non-need-based undergraduate loans.
Unlike the House plan, the loan interest rates would not be capped, but the president's bill would fix interest rates for the life of a loan. It would also keep students from paying student loan bills that take more than a 10 percent chunk out of their paychecks.
It appears, however, that the president is not interested in sitting down with Boehner to hammer out the few remaining differences and come to a compromise.
The White House issued a veto threat immediately following the House's passage of its bill.
Even if student loan interest rates cannot be restored back to 3.4 percent, the average cost per student is expected to be between $20 and $30 more a month. The interest rate hike would also not affect students who have already taken out loans, but would affect students taking out loans after July 1, 2013.