WASHINGTON — House Republicans are willing to give President Barack Obama a rare win, the chairman of the Education and Workforce Committee said Thursday in outlining a deal that would let college students avoid a costly hike on their student loans.
Rep. John Kline, R-Minn., told The Associated Press that his GOP-led panel would support an idea included in Obama’s budget proposal that links the interest rates on student loan to market rates. To calm fears of runaway interest rates, Kline said his proposal also would include a cap on interest rates that was not part of Obama’s proposal.
“At the end of the day, we believe that what we’ve done with this bill is make sure that the borrowers, whether they’re graduates or undergraduates or parents, can take advantage of the lower rates when they’re available,” Kline said.
Kline’s proposal also would end different interest rates for subsidized and unsubsidized undergraduate loans. Both would pay the same rates, which would be linked to 10-year Treasury notes.
Federally subsidized Stafford student loan rates will double on July 1, unless Congress steps in. During the recession that began in December 2007, Congress temporarily lowered the interest rates, bottoming out at 3.4 percent to help struggling students. The rates were scheduled to return to the pre-recession level of 6.8 percent last July 1, before Congress and the White House agreed during the presidential campaign to a one-year reprieve.
Lawmakers and advocates from across the political spectrum have said that the looming interest rate hike is foolish and easily avoidable. But there has been little agreement on how, exactly, to stop it, and without the White House up for grabs, the urgency on the issue had faded. The increase could cost satudents an extra $1,000 on new loans.
Rep. Joe Courtney, D-Conn., has proposed a two-year freeze on student loans while a broader deal could be reached. Rep. Karen Bass, D-Calif., offered another option that would permanently cap student loan rates at the 3.4 percent.
