Los Angles Times has written the following editorial in reference to student loan.
The Deal on Student Loans
At the last minute, like everything else in Congress, a bipartisan Senate deal fell into place on Tuesday to prevent interest rates on student loans from doubling on July 1. Now it is up to the House to quickly approve the measure and ensure that students struggling with the economy will not incur extra debt.
The deadline was hardly a shock. It was set by Congress in 2007 when it allowed interest rates on Stafford loans to fall to 3.4 percent from 6.8 percent over five years. But the usual fight occurred over how to pay for the loan subsidies because Republicans insist on offsets for everything except tax cuts for the rich.
The first Republican proposal was nakedly political, paying for the $6 billion cost by taking money from a preventive care fund in the health care law that helped poor people. That was immediately rejected by Democrats, who countered with a plan to eliminate a tax loophole for wealthy employees of certain small businesses. Naturally, that was unacceptable to Republicans, and a stalemate ensued that President Obama rightly denounced.
The eventual compromise, brokered by Senator Harry Reid, the majority leader, requires companies to pay higher premiums for federal pension insurance. It would also loosen requirements on how much companies would have to contribute to pension funds, which would mean companies would take fewer tax deductions on those contributions. Republicans won a provision that would limit the loan subsidies to six years for students pursuing bachelor’s degrees.
The pension provision is not ideal. It could mean that more companies will underfinance their pension liabilities, short-changing employees down the road. Lawmakers have tried to address that potential shortfall by strengthening the agency that insures private pensions with more money from higher premiums.
This deal only lasts a year, which will mean another showdown next summer. As it is, college students are already the victims of two other Republican-imposed cuts from last year. They must now start paying interest as soon as they graduate, instead of six months later, despite the rugged job market. And, starting Sunday, subsidized loans will not be available to graduate students.
If Congress truly cared about making sure that more students got a college education, it would have reached a long-term deal on subsidized interest rates and eased those new limits. Senate Republicans have signed onto the deal, and an agreement with House leaders could be reached as early as Thursday morning.
The loan agreement will be attached to a transportation bill that would pay for needed public works projects. Both should be passed quickly to bolster the economy and the college students who will work in it.