Senate Agreement Would Freeze Interest Rates On Student Loans For One Year

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Senate leaders have removed an increase in student loan rates (an unpopular idea for students and their families) from the table, at least for another year—pending House approval. But since we already know which party was trying to double the interest rates, I don't think students are going to forget:

More than 7 million college students could be spared higher loan rates under a deal reached Tuesday by Senate leaders.

The agreement would freeze the interest rate for a year, preventing it from doubling from 3.4 percent to 6.8 percent on July 1, making college more affordable for students even as tuition costs are rising.

Although leaders in both parties said they favored the rate freeze, they argued about how to cover its $6 billion cost.

While they bickered, President Obama traveled the country to rally college students to press for congressional action. If the deal emerges from Congress intact, Obama is likely to take credit for having forced the issue to the front of the agenda, but Republicans have countered that an agreement could have been reached weeks ago had Democrats not decided to make it a campaign issue. Republicans say that Democrats slow-walked the negotiations to allow the president to paint the GOP as the recalcitrant party and willing to risk higher college costs.

The deal was announced Tuesday by Senate Majority Leader Harry M. Reid (D-Nev.) and Senate Minority Leader Mitch McConnell (R-Ky.), who told reporters that they had worked out the arrangement but were still discussing how to push it through Congress in the final busy days before lawmakers leave Washington for a week-long Fourth of July holiday.

The proposal’s passage will be contingent upon an embrace from the GOP-held House, although McConnell indicated that he thinks the chamber’s leaders will favor the deal.

The New York Times reports they've agreed on how to pay for the freeze:

The $6.7 billion agreement would extend the current 3.4 percent rate on Stafford loans for one year, with about $700 million extra for deficit reduction, according to Senate leadership aides. The bulk of that — $5.5 billion — would come from two pension measures. One would change how private pension interest payments are calculated, smoothing the fluctuations for businesses even as the total cost rises slightly. The other would come from higher premiums for companies participating in the Pension Benefit Guaranty Corporation.

Another $1.2 billion would come from limiting how long a student could receive Stafford loans to 150 percent of the average time it takes to complete a degree. Currently there are no limits.

In other words, I imagine those people still lucky enough to have private pensions have just been screwed. Call it a hunch.


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