Student Loan Interest Rates Set to Double
U.S. student-loan interest rates are set to double in five weeks after the Senate rejected Democratic and Republican proposals to keep them at 3.4 percent.
The lawmakers left Washington for a weeklong Memorial Day break after shooting down dueling measures that offered different ways of paying the $5.9 billion price tag to extend the current interest rate on subsidized Stafford student loans for a year.
The loans are annually taken out by nearly 8 million students.
The Democratic proposal fell nine votes shy of the 60 needed to advance, while the Republican plan fell 26 votes shy.
Democrats proposed paying for the additional year of subsidies by ending a tax provision that lets some small business executives avoid paying payroll taxes on part of their income by counting it as business profits instead of wages. Republicans argued this amounted to a tax increase on those best positioned create jobs in the sluggish economy, The Washington Post said.
The Republican proposal would have paid for the loan-rate freeze by ending the preventative healthcare fund created in the 2010 healthcare reform law. Republicans called it a slush fund but Democrats argued the preventive healthcare fund's programs are helping bring down healthcare costs.