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No Elephants Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Apr-25-12 04:52 AM
Original message
What I don't understand about the student loan flap
I've done some googling and it seems the student loan stuff was a rider to the Affordable Care Act, which was passed by reconciliation.

So if the interest rate on student loans is scheduled to double, wasn't it the Democrats who scheduled that?
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No Elephants Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Apr-25-12 06:24 AM
Response to Original message
1. Modification. Apparently, the interest issue was part of
the College Cost Reduction Act of 2007. But, the question remains: why was the increase built into it in the first place? And, if it was a problem, why was it not fixed in the Reconciliation Bill of 2010, which did have a rider dealing with student loans in some way?

Does anyone know the history of this? I am not having a lot of luck with Mr. Google on this subject.
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KoKo Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Apr-25-12 10:12 AM
Response to Reply #1
2. I don't know if either of these two articles help explain what you ask...
Edited on Wed Apr-25-12 10:13 AM by KoKo
(I'm assuming from these two articles that Repugs blocked it in 2010?)

-----------

http://customwire.ap.org/dynamic/stories/U/US_STUDENT_L...

A guide to student loans

By KIMBERLY HEFLING
AP Education Writer

Q: Why is the interest rate on subsidized Stafford loans expected to double?

A: Acting on a Democratic campaign promise in 2006, Democrats in 2007 crafted the law to progressively lower the interest rate from 6.8 percent to the 3.4 percent rate - where it is this school year - and then return to the original 6.8 percent in 2012. Republican President George W. Bush signed the deal into law after it was approved by bipartisan but Democratic-heavy majorities in both chambers. Congress wrote the law this way for one simple reason, says Jason Delisle, director of the federal education budget project at the New America Foundation: cost. It would cost an additional $6 billion annually to keep the interest rate at 3.4 percent.

Q: Are there people who aren't affected by the rate increase?

A: Students issued loans before July 1 won't be hit with the higher rate. It also doesn't affect the interest rates on unsubsidized Stafford loans (now at 6.8 percent) and PLUS loans for parents (now at 7.9 percent). Unlike subsidized Stafford loans, unsubsidized Stafford loans are not based on financial need.

Q: What is the reaction from Congress?

A: Rep. John Kline, R-Minn., chairman of the House Education and the Workforce Committee, has said he and his Republican colleagues are exploring options "in hopes of finding a responsible solution that serves borrowers and taxpayers equally well." He said lofty campaign promises put them in an "untenable situation" and they now must choose between allowing interest rates to rise or "piling billions of dollars on the backs of taxpayers." In the Senate, Sen. Tom Harkin, D-Iowa, chairman of the Senate Committee on Health, Education, Labor and Pensions, said this week he intends to introduce legislation that would extend the interest rate for another year. Then, next year, Harkin said when the Higher Education Act is up for reauthorization, a longer term fix could be reached. He said they are looking at funding options.

-----


MUCH MORE:

http://customwire.ap.org/dynamic/stories/U/US_STUDENT_L...


And This:

Student Loan Interest Rates Loom as Political Battle
By TAMAR LEWIN
Published: April 20, 2012

At a time when Americans owe more on student loans than on credit cards student debt is topping $1 trillion for the first time and the Occupy movement has highlighted the rising furor over spiraling student debt, the issue has moved higher on the political agenda. But the question of what to do about the looming interest rate increase has landed deep in the chasm separating Democrats from Republicans, who accuse the president of using the issue in a fiscally irresponsible way, in an attempt to buy the youth vote.

The Congressional Budget Office has estimated that a one-year freeze on the interest rate for subsidized Stafford loans would cost $6 billion.

Bad policy based on lofty campaign promises has put us in an untenable situation, said John P. Kline Jr., the Minnesota Republican who is chairman of the House Committee on Education and the Workforce.

The low interest rate stemmed from the 2007 College Cost Reduction and Access Act, which reduced interest rates on subsidized Stafford loans over the following four academic years from 6.8 percent to the current 3.4 percent with the proviso that the rates would revert to 6.8 percent this July. Extending the low rate would be too costly, Mr. Kline said. We must now choose between allowing interest rates to rise or piling billions of dollars on the backs of taxpayers, he said. I have serious concerns about any proposal that simply kicks the can down the road and creates more uncertainty in the long run which is what put us in this situation in the first place.

Mr. Kline, who earlier this year called the interest-rate hike a ticking time bomb set by Democrats, said he was exploring other options in hopes of finding a solution that served borrowers and taxpayers equally well.

When the 2007 law was passed, 77 Republicans most of whom are still in Congress voted for it. But in the current climate of fractious partisanship, new legislation introduced by Representative Joe Courtney to extend the lower rate has 127 co-sponsors, all of them Democrats.

Mr. Courtney said he was hopeful that some Republican support would be forthcoming as the political stakes became more apparent.

MORE at:

http://www.nytimes.com/2012/04/20/education/student-loa...



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No Elephants Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Apr-26-12 06:01 AM
Response to Reply #2
3. The Democrats wrote the 2007 bill so that the rates would double in 2012.
Edited on Thu Apr-26-12 06:08 AM by No Elephants
Why did they do that, instead of cutting the rates without an expiration date on the lower rates? Or at least a longer time than only five years.

By 2007, if you were at all awake, you knew the economy was in trouble due to crap mortgage derivatives and the housing bubble they and Bushco caused. And, even if you didn't know that--though you should have, if you were in Congress--why only five years anyway?

Thank you for the links to the articles, but they don't answer my question. And, FWIW, I did not see anything in them that leads me to believe that Republicans blocked anything relating to this between 2010 and now. I don't think anything was up for a vote until now--and it's up for a vote now only because of the way that Democrats in 2007 wrote this bill.
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