Interest Rates Double on Student Loans Amid Democratic Infighting

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Interest rates on student loans doubled today,

“following top Senate Democrats’ rejection of a bipartisan compromise supported by the president.” We could have easily avoided this.

Back in May, the Republican-led House of Representatives passed the Smarter Solutions for Students Act – a bill based on President Obama’s own proposal and part of the Republican Plan for Economic Growth & Jobs. The House bill would have stopped an immediate rate hike and permanently fixed the program by tying rates to the market (not “the whims of Congress” which, as we can see, aren’t all that reliable). It also protects borrowers by capping rates.

Senate Democrats didn’t pass any bill at all – they left Washington and just let rates double. President Obama never really urged the leaders in his party to take action. And without the president’s involvement, “divisions within their own caucus” have prevented a long-term solution.

You see, some Democrats support a bipartisan plan like the one passed by the House. Others want another short-term fix (“let’s put this off for a year”) to “bring the issue to a head in 2014, when the party again hopes to rally younger voters to the polls in congressional elections ...” These Democrats would rather score political points than solve a problem, and students are the ones paying the price.

The uncertainty over student loans isn’t the only challenge facing young Americans under President Obama. Young and healthy “consumers could see insurance rates double or even triple” under the president’s health care law, says the Wall Street Journal. Finding work is tough too: “the unemployment rate for workers aged 20 to 24 remains stubbornly above 13 percent” and “the rate for those ages 25 to 34 is more than 7 percent,” wrote former CBO Director Douglas Holtz-Eakin in Reuters.

“This Democratic infighting is exactly why we have to take politics out of student loans and put in place a permanent solution,” said Speaker Boehner last week. Click here to learn more about the Smarter Solutions for Students Act and click here for the latest from the Education & the Workforce Committee.

Office of the Speaker H-232 The Capitol Washington, DC 20515 Phone: (202) 225-0600 Fax: (202) 225-5117