GOP to Obama: Work with Congress on student loan interest rate fix

A key GOP senator is calling on President Obama to work with Congress to move a student loan debt fix before rates increase on July 1st.


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Sen. Lamar Alexander (R-Tenn.) – a former Education Department secretary – said that the Senate must act in order to prevent the rate hike.

“Between now and the end of the month, Senate Republicans will work hard with the president and with the House to produce an agreement that ensures all student borrowers benefit from today’s low interest rates. That would mean that 100 percent of all new student loans made this year would have a rate below five percent,” Alexander said in the weekly GOP national address.

Alexander noted that the House of Representatives already acted on a measure, similar to one favored by President Obama, to “allow the market to set interest rates.”

On Friday, House Majority Leader Eric Cantor (R-Va.) revealed on the House floor that House Republicans have been trying to work with the president – bypassing the Senate – to prevent current student loan rates of 3.4 percent from doubling to 6.8 percent on July 1st.

Cantor said, "I've talked to several members of the administration, [Education & the Workforce Committee] Chairman John Kline [R-Minn.] has been in contact, I know, with the secretary [of Education] as well as others in trying to resolve this issue," Cantor said. "Discussions are ongoing, and it is my hope … that we can resolve this issue so that prospective students could be assured that their rates would not double."

Cantor described the talks in a discussion with House Minority Leader Steny Hoyer (D-Md.), who pointed out that the Senate does not have the votes for a Democratic proposal or the House-passed plan to avoid the rate hike.

"The reason the Senate hasn't acted … is because … frankly they can't get cloture," Hoyer said. "They can't get 60 votes, and frankly, Mr. Reid doesn't have 60 votes."

The House passed a bill that would set the interest rate at the 10-year Treasury rate plus 2.5 percent, and would cap rates at 8.5 percent. While this plan is structured similarly to one President Obama proposed, it is different enough that Obama and congressional Democrats oppose it.

Obama's plan would have added 0.9 percent to the 10-year Treasury rate.

Alexander said that congressional Republicans may agree with Obama on student loan rates but they diverge on national education policy.

“To put it simply, Democrats want a national school board; Republicans favor local control."

He blamed a plethora of new mandates in education for failure in U.S. schools, noting that the Senate Democrats “reported to the full Senate an eleven-hundred-and-fifty-page plan that would not only freeze these mandates into place, but double down, creating more than twenty-five new programs as well as more than 150 new reporting requirements.”

Instead, Senate Republicans want to move a measure they call “Every Child Ready for College or Career" that “emphasizes state and local decision making.

--Pete Kasperowicz contributed to this report.