UPDATE 2-US House to vote on student loan rate extension
* Republicans seeks to pay for it with money from healthcare
* Democrats favor plugging tax loophole for rich
* White House pushes back but sees prospect for deal
WASHINGTON, April 25 (Reuters) - The Republican-led House of Representatives, in an election-year showdown with President Barack Obama, moved on Wednesday to avert a doubling of a low-federal student loan rate by taking money from Obama's healthcare overhaul.
House Speaker John Boehner unveiled the proposal and announced that his chamber would vote on it on Friday - after Obama on a campaign-style tour pushed Congress to take action to preserve the low rate for millions of students.
While Boehner's measure is expected to win House passage, it will face rejection in the Senate, controlled by Obama's Democrats, said a spokesman for Senate Majority Leader Harry Reid.
The White House, which has sought to cast Obama as champion of the middle class while painting the Republicans and their likely presidential nominee Mitt Romney as beholden to the rich, quickly pushed back against Boehner's funding proposal but held out the prospect of an election-year deal.
"This is no time to refight old political battles. We should be able to work together to find offsets that don't penalize middle-class families or undermine efforts to help more Americans stay healthy," White House spokesman Nick Pappas said.
Unless Congress acts by July 1, the loan rate will double to 6.8 percent for more than 7.4 million students.
Democrats favor covering the projected $6 billion cost of extending the low federal student loan rate for a year by a plugging a loophole that they say wealthy professionals use to avoid payroll taxes.
At a hastily called news conference, Boehner said: "Today I'm pleased to announce that on Friday the House will vote on a bill to extend the current interest rate on federal student loans for one year."
"We will pay for this by taking money from one of the slush funds in the president's health care law," Boehner said.
HEALTHCARE OVERHAUL FUNDS
Boehner would pay for the extension by taking money from a fund established by Obama's healthcare overhaul to finance wellness programs and public health activities to prevent illness.
Reid said, "Democrats are opposed to short changing a program that prevents disease and protects against public health emergencies just so Republicans can continue protecting millionaire tax dodgers."
"The best way to pay for legislation to keep student loan interest rates from doubling is to close a tax loophole that allows wealthy individuals to avoid paying the same income taxes that middle-class Americans pay," Jentleson said.
Republicans won control of the House in 2010, promising to repeal the healthcare overhaul. They have been unable to do so, but have repeatedly sought to chip away at it.
Boehner ripped into Obama for his campaign-style events before largely young audiences where he pushed Congress to extend the low student loan rate.
"This week, the president is traveling the country, on the taxpayers' dime, campaigning and trying to invent a fight where there isn't one," Boehner said.
"We can and will fix the problem without a bunch of campaign-style theatrics," Boehner said.
Trending On Reuters
We are living longer but not creating financial plans to keep pace. Advisers give tips on how to make sure you don’t outlive your money. Video