Sen. Mike Johanns (R-Neb.) today voted to extend current federally subsidized student loan interest rates for one year. The legislation, which Johanns cosponsored, is identical to the House-passed student loan bill. It did not receive the required 60 votes. A bill introduced by Sen. Harry Reid (D-Nev.) which extends the current rate and is paid for with higher taxes also failed.
"College graduates entered a job market this month where half of their peers are either unemployed or underemployed," Johanns said. "Now is not the time to double student loan interest rates, but it's also not the time to raise taxes on some of the small businesses graduates will turn to for a job. There were two bills on the floor today; the one I supported offered a responsible solution. The other was already rejected once because it continues playing politics instead of offering a solution."
The legislation Johanns cosponsored was offered by Sen. Lamar Alexander (R-Tenn.) and would offset the cost by eliminating a duplicative fund created by the 2010 health care law. President Obama has previously signed legislation that was paid for by reductions in this fund and proposed reducing it further in a deficit reduction package.
Johanns opposed the Reid legislation, which the Senate has already once rejected, because it is paid for by increasing taxes on certain small businesses. The Reid bill calls for an expanded payroll tax on job creators. This would divert funds otherwise directed to the Medicare and Social Security Trust Funds to unrelated spending.
The student loan rate debate was prompted by an expiring law, passed in 2007, that gradually and temporarily lowered federally subsidized undergraduate student loan rates from 6.8 to 3.4 percent. Student loan rates will return to their original 6.8 percent in July if Congress does not act on an extension.