U.S. Representative Judy Biggert (R-IL-13th) today introduced legislation 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.
"When I talk to students and families, it's clear that today's economy doesn't hold the same promise for young adults that it once did," said Biggert, a Senior Member of the House Education and the Workforce Committee. "Our sons and daughters are moving back home after college, and Washington's tax-and-spend policies have only made it harder to find work. According to a recent AP report, at least half of recent graduates are unemployed or underemployed."
Biggert's bill is expected to reach the House floor as soon as this Friday. 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. 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. Biggert said her bill would reclaim money that was originally siphoned away from higher education, and put it towards lowering interest rates for low- and middle-income students.
"The last thing we should do is allow federal loan rates to double and make it that much harder to afford a high-quality education," said Biggert. "Unfortunately, that's exactly what would happen if Democrat leaders don't set aside the campaign rhetoric and work with us to find a responsible way to pay for an extension. My bill eliminates an unnecessary expense in the President's health care law, extends lower rates for college loans, and provides financial security for today's students without raising taxes on their potential employers. It's a common-sense plan that deserves bipartisan support, and I hope our colleagues in the Senate will work with us to send it to the President immediately."