Dem congressman says funding method in House student loan bill 'a false choice'

A Democratic congressman called the funding method in legislation passed by the Republican-controlled House to keep student loan interest rates from rising a "false choice," adding that there's a better alternative.

Rep. Russ Carnahan (D-Mo.), speaking on local Missouri radio station KMOX on Tuesday, said that there's a better way to to keep Stafford college student loan interest rates from rising to 6.8 percent (from 3.4) than the one proposed in the House legislation, H.R. 4628, the Interest Rate Reduction Act, which passed the chamber on Friday.

The House legislation keeps the rate at 3.4 percent by taking money from a preventive care fund in the Obama administration's healthcare reform legislation and using it to extend the current rate. The rate is set to rise unless legislators pass a bill that extends the current 3.4 percent before July 1.

"The bill passed in the House last week attempted to fix this but it did it on the backs of preventative healthcare," Carnahan said. "That's a false choice. There's a better alternative that would do this paid for by closing some of the unnecessary tax loopholes that the oil industry has now that they don't need at a time when they're making record profits. So there's a better way of doing this and we need to get it done before this deadline."

When the Senate reconvenes it will take up its own legislation to keep the interest rate from rising. Democrats and Republicans in both chambers have expressed strong interest in stopping the interest rate from rising, but the sticking point seems to be the pay-for. While Republicans want to pay for the extension through money from the Obama administration's healthcare law, Democrats want to pay for it through closing loopholes, like ones for S corporations that allow shareholders to avoid payroll taxes if they report some of their income as company profit. 

Carnahan suggested that he would rather pay for the rate extension by closing loopholes on gas and oil companies.

"I think the better idea is close some of the loopholes in the oil and gas industry," Carnahan said. "We should not be attacking preventative measures, especially ones that are focused on particularly women and children — cervical cancer screenings, immunizations, those kind of things are what have been taken a whack at under the Republican proposal."