Republicans Senators have blocked further work on the ‘Stop the Student Loan Interest Rate Hike Act of 2012’ with a vote of 52-45. Democrats are spinning the continuation of the congressional battle as being the fault of the Republican party:
The White House called the bill’s failure “extremely disappointing” in a statement following the vote.
“It is extremely disappointing that Republicans in the Senate today voted to ask millions of students to pay an average of $1,000 each in order to protect a loophole that allows millionaires to dodge payroll taxes,” the statement said.
However, GOP Presidential nominee Mitt Romney has already come out in favor of an extension being granted to the Stafford loan plan. He and current President Obama are in agreement on the issue, as one would expect to happen in an electoral year where neither candidate would be willing to take the potentially vote-costing position of allowing the Stafford loan scheme to lapse as originally planned when it was passed as a supposedly temporary measure.
Indeed politicians on both sides are in general agreement that an extension of the low interest student loan rates should be granted. If it lapses on July 1 then the rates for more than 7 million students will double from 3.4% to 6.8%.
The argument is over how to pay for the extension. The defeated bill had proposed to pay for it by requiring some privately owned companies to pay higher payroll taxes for Medicare and Social Security. Senate Majority Leader Harry Reid said that these are actually taxes that the companies should already owe and so rejects the Republican claim that they are proposing to pay for the extension with new taxes. This is also behind the White House’s derisory comments.
Senate Republicans, however argue that Reid’s proposals actually divert billions of dollars from Medicare to students and effectively tax the companies that the country needs to hire the student graduates. They have proposed an alternative funding solution that would pay for the Stafford extension by abandoning a preventative health fund established by the President’s health care reforms.
Senate Minority leader Mitch McConnell said:
“This is a perfectly reasonable solution to a problem both parties want to address,” McConnell said Tuesday. “It passed the House with bipartisan support. If Democrats want to solve this problem, they should embrace it too — or at the very least offer a bipartisan solution of their own. The White House has done neither.”
The White House has already vowed to veto the proposed Republican Bill which passed the House last week.
The Education Department estimates that Stafford loans, which are for low and middle income students, will if extended account for $31.6 billion in loans next year; an average of $4,226 for every student. The cost to the country of extending the Stafford program is estimated to be close to $6 billion a year.