Student loan interest rates stay put at expense of health care reform

Official House Republican Conference photo

H.R. 4628 has passed in the U.S. House of Representatives, and instead of the government subsidizing student loans below the 3.4 percent interest rate, the bill steadies the rate until July 1, 2013.

Some question whether these government loans to students, who may find themselves in unemployment lines instead of in jobs once they graduate, should be 0% and wonder why the government is making money off students who otherwise could not receive a loan without having incomes. Others view this as a tax on people who are trying to get an education but have no guarantees that their investments in education will pay off down the road.

According to the GOP.gov's Legislative Digest, H.R. 4628 prevents interest rates on new federally subsidized Stafford Loans made to undergraduate students from increasing from 3.4 percent to 6.8 percent on July 1, 2012. 

House Speaker John Boehner (R-OH) released the following statement after the House approved the Interest Rate Reduction Act (H.R. 4628), legislation by Rep. Judy Biggert (R-IL) that would extend current student loan interest rates by cutting spending from an ObamaCare slush fund:

“Students and families are struggling in President Obama’s economy. Nearly half of college graduates are unemployed or underemployed, and laws like ObamaCare have only made it harder for small businesses to hire them. That’s why House Republicans voted to extend current student loan rates and to pay for it by eliminating an ObamaCare slush fund President Obama himself proposed cutting from his budget.

"It’s time for the president and Democrats in Congress to stop exploiting the challenges facing young Americans for political gain, and start working with Republicans to create a better environment for private-sector job growth.”

The cost of a one-year extension of the lower rate is $5.985 billion, and in order to pay for this cost, the bill would repeal the unobligated balance of the “Prevention and Public Health Fund,” a slush fund in the president’s government takeover of health care law, according to GOP.gov.

The remaining savings generated from repealing the $11.9 billion slush fund will be put toward deficit reduction. Budgetary effects of the new bill can be viewed at http://www.cbo.gov/publication/43200.

©2012 Tomi Johnson. All rights reserved.