House Republican leaders gathered with dozens of well-dressed college students on the steps of the U.S. Capitol Monday afternoon to blast Senate Democrats for not yet passing a student loan bill, allowing the interest rate on one type of federal loan to double last week. Stafford loans, which are commonly used by undergraduates, have an original interest rate of 6.8 percent but for six years -- up until July 1 -- the government subsidized it at a lower rate for low-income students, which for several years has been 3.4 percent.
The Republican-led House passed a bill in late May that establishes a variable interest rate for Stafford loans that's tied to the government's cost of borrowing, a concept that President Obama has supported. For the coming school year, that would likely mean a rate of less than 5 percent. In future years, the rate could go as high as 8.5 percent.
Speaker John A. Boehner (R-Ohio) criticized Obama for not pushing the Democrat-led Senate to take action before July 1. Stafford loans have annual borrowing limits and account for only a portion of all student loan debt, which currently totals more than $1 trillion.
"The White House and Senate democrats have let these students down," Boehner said. "Frankly, I think that they deserve better. It's time for the president to lead. It's time for him to bring the Senate Democrat leaders together and develop a solution. The House has done its job. It's time for the White House and the Senate to do its job."
Other Republican leaders joined in the criticism: Rep. Cathy McMorris Rodgers (R-Wash.) accused senators of putting politics ahead of students who, she said, might not be able to finish their college degrees because of the rate increase. Majority Whip Kevin McCarthy (R-Calif.) called upon Senate Majority Leader Harry Reid to take action and not "punish" students. Rep. John Kline (R-Minn.), chairman of the education and workforce committee, called for a long-term solution.
Usually Democrats are the ones talking about student loan debt and college affordability against a backdrop of smiling 20-somethings. On the campaign trail last year, Obama hopped from campus to campus, urging students to contact their lawmakers via social media (or old-school e-mail and phone calls) and tell them to extend a five-year subsidy of Stafford loan rates. As the Obama-promoted hashtag #DontDoubleMyRate took off, Mitt Romney joined the cause. Congress then agreed to freeze the rate for another year.
But that meant they again had to tackle the issue this year. The hashtag again came to life, with both parties using it to push their ideas for finding funds to continue a lower interest rate. While the House got a bill passed, mostly along party lines, the Senate stalemated. Senate Democrats have expressed concerns about a variable rate, especially one without a cap. There is now pressure to make a decision before the academic year begins and students take out new loans. The Senate is expected to vote on a proposal Wednesday that would lock in the subsidized 3.4 percent rate for yet another year.