Boehner asks Obama to press Democrats to act on student loan rates

WASHINGTON Thu Jun 20, 2013 4:33pm EDT

U.S. House Speaker John Boehner (R-OH) calls on a reporter during a news conference at the U.S. Capitol in Washington, June 20, 2013. REUTERS/Jonathan Ernst

U.S. House Speaker John Boehner (R-OH) calls on a reporter during a news conference at the U.S. Capitol in Washington, June 20, 2013.

Credit: Reuters/Jonathan Ernst

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WASHINGTON (Reuters) - House of Representatives Speaker John Boehner urged President Barack Obama on Thursday to push Democrats in Congress to back a move to switch student loan interest rates to a market-based system before they double on July 1.

In just 10 days, rates on federally backed student loans are due to rise to 6.8 percent from 3.4 percent unless Congress acts. Instead, lawmakers have been engaged in partisan squabbling that is expected to end in a last-minute resolution.

In an open letter to the president, Boehner attempted to align a Republican market-based approach to a similar proposal by Obama.

The bill Boehner touted, passed by the Republican-led House in May, would peg interest rates at 2.5 percentage points above the 10-year Treasury note and cap rates at 8.5 percent. Rates would be recalculated every year.

Under Obama's plan, rates would also be set based on the 10-year note, plus 0.93 percentage point, but fixed for the life of the loan. His plan does not include a rate cap.

The 10-year Treasury note currently yields about 2.40 percent.

"On an issue you have made a top priority, it is astonishing that your fellow Democrats have been so openly hostile to your proposal," Boehner wrote.

The White House has threatened to veto the Republican bill, which also faces opposition in the Democratic-led Senate.

Republicans have expressed frustration over what they say is unwillingness by Democrats to find a compromise between the two proposals.

"Frankly, there is no evidence that Democrats are making a sincere effort to get a bill passed in the Senate," Boehner said in his letter. "With Republicans and you in general agreement on the policy, it is difficult to identify any motivation other than politics to explain why a solution has not already been signed into law."

Democrats including Minority Leader Nancy Pelosi and California Representative George Miller, using college students as a backdrop on the same day, vowed instead to force a vote to extend the current lower rates.

Student loan debt in America now exceeds $1 trillion with the average borrower owing $27,000. Higher rates, lawmakers say, will only increase the debt burden on borrowers.

"The only thing that could happen that's worse than that is if the Republican bill should pass, because that's worse than doing nothing," said Miller, who is also senior Democrat on the House Education and Workforce Committee.

(Editing by Eric Walsh)

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Comments (2)
donincardona wrote:
no . we are not going to let the banks rape the kids like that. the markets have stopped working for the people. i say no to boner.

Jun 20, 2013 6:08pm EDT  --  Report as abuse
zoobee wrote:
Considering that the federal government administers and lends all Stafford loans, you are right, donincardona, the bank will not be raping anyone.

Boehner is 100% correct on this issue. The plans are so similar that there is absolutely no reason that a bill should not have been passed already. Thank the Democrats and Obama for making an issue out of nothing.

Miller is a liar or an idiot if he thinks the Republican bill is worse than nothing. The Republican bill and Obama’s proposal are very similar, and Obama’s is amazingly similar to a Republican proposal from last year that he didn’t support. Obama’s bill fixes interest rates for the life of the loan and a slightly lower rate for subsidized than the Republicans, and the Republican bill has an interest rate cap, which Obama’s does not.

The bipartisan bill combines the best parts of both bills: an interest rate cap and a fixed rate once the loan is originated. There is absolutely no reason that this should not be fixed.

Instead, certain Democrats, want to use a quick fix approach to keep the rates at an unsustainable 3.4% and then play off like the Republicans, and many Democrats in support of Obama’s plan and the bipartisan deal, are trying to hurt students. That is not just utterly ridiculous, it is a blatant lie.

Jun 21, 2013 12:25pm EDT  --  Report as abuse
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