NEW YORK (MainStreet)While a bill introduced last week by recently-elected Senator Elizabeth Warren (D-Mass.) -- her first -- to cut the rates on federal student loans was a make-good on a campaign promise, it is part of a legislative land rush in Congress aimed at fixing rates, coming from both sides of the aisle -- and the White House.
Presidential candidates Mitt Romney and Barack Obama were working the same issue about a year ago, leading to a one-year extension of the 3.4% interest rate on subsidized federal student loans. Students lobbied hard against a scheduled increase, and the Obama administration extended the current rate for an additional year.
That rate expires on July 1, when it jumps from 3.4% to 6.8%.Republicans in Congress have responded with HR 1911, the Smarter Solutions for Students Act.
"We've got to stop kicking the can down the road with short-term fixes to this interest rate problem," said John Kline (R-Minn.), the Chairman of the House Education and the Workforce Committee, referring to the prospects of another temporary, one-year extension. "The Smarter Solutions for Students Act is a lasting solution that will serve the best interests of students and taxpayers. Our proposal ensures that millions of subsidized Stafford Loan borrowers will not see their interest rates double this July, and other borrowers will actually have their rates reduced." Kline said that politicians would get out of the business of calculating student loan interest rates, a solution also proposed in the Obama administration's Fiscal Year 2014 budget plan.