The U.S. House of Representatives today approved legislation authored by Rep. Judy Biggert (R-IL-13th) that would prevent a scheduled July 1st interest rate hike on certain federal student loans. Under a 2007 statute, the interest rate on subsidized Stafford loans to undergraduate students was phased down from 6.8% to 3.4%, but interest rates are scheduled to return to previous levels unless Congress acts. Biggert's legislation, H.R. 4628, the Interest Rate Reduction Act, would extend lower rates for an additional year. The bill was approved by a vote of 215 to 195, and it now heads to the Senate for consideration.
"Every penny counts when you're trying to start a career in a job market where even the most experienced workers can't find a job," said Biggert, a Senior Member of the House Education and the Workforce Committee. "And the tax-and-spend polices in Washington haven't made it any easier. The last thing these students need is more debt, and my bill will prevent an unfair rate hike at the worst possible time."
During debate on the measure, Biggert pointed to a recent AP report showing that half of recent graduates are unemployed or underemployed. Without action, the Administration estimates that approximately 7.4 million students would accrue an additional $1,000 in higher interest costs over the life of an average loan.
"This is a bipartisan priority, and I hope our colleagues in the Senate will set aside the election-year games and help us solve this problem immediately, without the drama of a last minute, on-deadline fix," said Biggert.
To cover the $6 billion cost of a one-year extension, Biggert's proposal would cut a program called the Prevention and Public Health Fund in the Administration's 2010 health care law. Intended to support prevention-related activities, the program has been criticized as an administrative "slush fund" with no clear oversight or purpose. The President proposed cutting $4 billion from the same fund in his fiscal year 2013 budget, and he previously signed bipartisan legislation, H.R. 3630, that cut $5 billion from the fund to offset the cost of a payroll tax extension.
"It's a common-sense fix that doesn't add to the debt or raise taxes on the same businesses that these students are looking to for jobs," said Biggert. "Washington needs to work harder to find bipartisan solutions to these problems, cut the debt, and get our economy moving again so students and their parents can look forward to graduation day. The bill is just a small piece of the puzzle, but it's an important step in the right direction."
H.R. 4628 also has received support from the higher education community.
"Doubling the interest in the subsidized Stafford loans will discourage students in need who are striving to continue their degree studies during these difficult economic times," said Brother James Gaffney, President of Lewis University in Romeoville, in a letter to Biggert. "Thank you for your support for these students."