Despite Obama Veto Threat, Student Loan Bill Passes the House
With less than six weeks left until the interest rate on Stafford loans are set to double if Congress doesn’t act, proposals on how to address these federal interest rates have been pouring in from all branches of the government.
On Thursday, the House passed the Smarter Solutions for Students Act, which would put Stafford loan interest rates in step with financial markets from year to year, ending a system in which rates are set by Congress. This “simple” solution likely won’t get far, as it faces opposition from Senate Democrats who have a competing bill that would extend the current interest rate of 3.4 percent for two years, giving Congress time to consider a long-term approach to address the growing student debt crisis that impacts 38 million Americans.
President Obama also threatened to veto the bill, calling it the “wrong approach” for students and their families, citing the lack of transparency and clarity for student and parents who try to garner the true price tag of borrowing for college, missing repayment options for borrowers who don’t attend school anymore, and shifting the burden of reducing the deficit on the shoulders of student loan borrowers among others.
In response to the House’s passage of the bill Carmel Martin, executive vice-president for policy at the Center for American Progress, our parent organization, said in:
The decision by the House of Representatives to approve Rep. Kline’s proposal is a step in the wrong direction for students and the economy. Rep. Kline’s bill taxes students to pay down the deficit. Congress should act to stop rates from doubling and build in protections for students to help them manage their debt. The House measure would divert $3.7 billion from the program to deficit reduction and result in an increase in student debt of close to $4 billion over what borrowers would pay under current law.