Pelosi: GOP 'folded' on student loans due to pressure from Obama

House Republicans "folded" to pressure from President Obama to extend low rates on certain student loans, House Minority Leader Nancy Pelosi (D-Calif.) charged Friday.

Pelosi said Obama's public campaign to prevent interest rates on federally subsidized Stafford loans from doubling this summer was "too hot" for Republicans to handle, leading GOP leaders to schedule their hasty Friday vote to keep the lower rate.

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"The Republicans have folded because the president made the issue too hot to handle. That is why the bill is coming up today," Pelosi said during a press briefing in the Capitol just hours before the vote.

"They felt the heat of the president going out there and saying, 'We cannot allow [the rate hike] for families trying to send their kids to college. So the timing is their folding."

After five years at the 3.4 percent level, the interest rate on Stafford loans is set to double to 6.8 percent on July 1 if Congress doesn't intervene first.

House Democrats have urged a continuation of the 3.4 percent rate, while Republicans have twice this year passed legislation returning to the 6.8 percent rate, including a vote held last week.

On Wednesday, however, Republicans flipped, introducing legislation to extend the 3.4 percent rate for another year. To pay the $5.9 billion cost, the Republicans proposed to eliminate a $12 billion preventative health services fund created by the Democrats' 2010 healthcare reform law – money the GOP has long-characterized as a "slush fund." The extra savings, under the GOP bill, would go to pay down the deficit.

The White House on Friday threatened to veto the GOP bill, saying elimination of the healthcare fund would hinder access to health services, particularly for women.

"This is a politically-motivated proposal and not the serious response that the problem facing America’s college students deserves," the White House said in a statement.

Republicans were quick to fire back. Hoping voters forget their promotion of the 6.8 percent level, GOP leaders say the Democrats' opposition threatens students with the higher rate.

"The president is so desperate to fake a fight that he’s willing to veto a bill to help students over a slush fund that he advocated cutting in his own budget," Michael Steel, spokesman for House Speaker John Boehner (R-Ohio), said Friday in an email. "It’s a simple as this: Republicans are acting to help college students and the president is now getting in the way.”
 
The issue has become prominent on the campaign trail, where Obama and the Democrats are trying to turn the Republicans' initial opposition to the 3.4 percent rate into a liability for the GOP.

Obama featured the issue in his weekly White House address last weekend, and has since taken that message on the road, including making stops at several college campuses this week.

"We have to make college more affordable for young people,” Obama said Tuesday at University of North Carolina. “That’s the bottom line.”

Adding to the pressure on congressional Republicans, Mitt Romney, the presumptive GOP presidential nominee, endorsed a one-year fix on Monday.

With both sides now advocating a one-year extension of the 3.4 percent rate, the fight is now over how to pay for it.

Behind Boehner, Republicans are pointing out that Democratic leaders, including Obama, have already supported a $4 billion cut to the preventive fund as part of December's payroll tax deal.

"They’ve made clear the precedent is there," Boehner said Thursday. "They don’t believe this money is essential to their program. That’s why it’s being paid for here."

But Democrats have rejected that notion, arguing that they never supported the healthcare cut in the payroll package, and conceded to it only in the name of compromise.

The $4 billion cut to the preventive health fund, Pelosi said Friday, is "all the more reason why we shouldn't be taking any more money out of it."

"We weren't happy [with the $4 billion cut], but that was the only way that they would agree to the payroll tax deduction," she said.

"They don't really take out what they need, they want to eliminate the [whole] fund," Pelosi added. "I view it as a statement of their values."