“NO” on the Student Loan Bill (House)
On Friday, the House will vote on the Interest Rate Reduction Act (H.R.4628), which would keep student loan rates at 3.4%, instead of allowing them to return to their 2007 level of 6.8% on July 1. The bill would be paid for by rescinding funds from Obamacare’s Prevention and Public Health Fund.
Student loan interest rates were originally lowered in 2007, as part of the new House Democrats’ 100-Hour Plan. The reduction was supposed to be temporary – only lasting 5 years. As is often the case in Washington though, there is no such thing as a temporary subsidy. Not only do the subsidies fail to stem the rising cost of a college education, the loans are also easily attained, increasing the likelihood taxpayers will be left on the hook when students default.
Maintaining the lower, taxpayer-subsidized loan rate will also cost taxpayers $5.9 billion for a one-year extension. The “benefit” would only apply to the so-called subsidized Stafford loans, and only to new borrowers who apply for the loans this year. And for that narrow group, it will only save them about $7 a month after they graduate.
This bill proposes to pay for the $5.9 billion extension by taking funds from Obamacare’s Prevention and Public Health Fund. The proper approach to Obamacare is to repeal the entire law. Congress should not use Obamacare as a “slush fund” to pay for temporary extensions.
Heritage Action opposes H.R.4628 and will include it as a key vote on our scorecard.
Heritage Action’s Legislative Scorecard
Heritage: Assessing the President’s Proposals on Higher Education Costs
Heritage: The Rest of the Story on Student Loans
College (Loan) Football: The Looming Interest Rate Hike