Saturday, June 23, 2012

Deadline Looming On Doubling of Student Loan Interest Rates

Posted By on Sat, Jun 23, 2012 at 9:57 AM

In an effort to head off a Sunday, July 1, deadline that could see the doubling of interest rates on federal loans to more than 7 million college students, the Obama White House continues to huddle with Congressional leaders on a compromise.

Senate aides from both sides of the aisle told the Associated Press on Friday that the two sides were moving toward a deal on how to pay the election-year measure's $6 billion price tag, the main sticking point.

The ultimate goal is to push legislation through Congress in the next week so that the current 3.4 percent interest rate on subsidized Stafford loans can be preserved, at least for another year. Interest rates were gradually reduced to their current level through a 2007 law, but a sunset clause would send the rate back to 6.8 percent by July 1.

In April, a Republican-backed measure to restore funding for the low rates was passed in the House of Representatives, but the White House vowed to veto the plan because it would have been funded by repealing the Prevention and Public Health Fund, which provides screenings for breast and cervical cancer. Idaho's representation in the U.S. House split on the measure, with Rep. Mike Simpson voting "yes" while Rep. Raul Labrador voted "no."

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