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CQ TODAY ONLINE NEWS – EDUCATION
June 21, 2012 – 5:59 p.m.

GOP Leaders Refute Reid’s Claim of Progress on Student Loan Bill

By Lauren Smith, CQ Staff

After weeks of foot-dragging, Congress may be getting serious about averting a student loan interest rate hike on July 1. Senate Majority Leader Harry Reid, D-Nev., and a White House spokesman confirmed Thursday that conversations are finally taking place, although Republicans said they haven’t been part of those discussions.

“We’ve had a series of meetings over the last 48 hours,” Reid said at a news conference. “While we’re not there, we are well down the road. We have great hope that we can get that done.”

Reid did not say who attended the meetings or which offsets the group seemed to be leaning toward to pay for a $5.9 billion, one-year extension of the current 3.4 percent interest rate.

“We are engaged with Congress in trying to get this done,” said Jay Carney, White House spokesman. “I don’t have a roster of which members or which staffers. It obviously requires both parties to get this done, and therefore we are working with Congress, broadly speaking, to get this done.”

But spokesmen for Senate Minority Leader Mitch McConnell, R-Ky., and House Speaker John A. Boehner, R-Ohio, refuted that claim Thursday.

“We have had no response from the White House,” said Don Stewart, McConnell’s spokesman. “I really don’t know what Jay Carney was talking about today.”

A spokesman for Boehner also said that he and other GOP leaders have not been included in any conversations on how to move forward on the student loan issue.

Broad Agreement Only

Both sides of the aisle have agreed since late April that the interest rate for new federally subsidized undergraduate loans should not be allowed to rise from 3.4 percent to 6.8 percent on July 1, when the law (PL 110-84) setting the rate expires. But lawmakers have been arguing about how to pay for a one-year extension of the current rate.

At a White House event Thursday, President Obama lambasted Congress for its inaction.

“It’s mind-boggling that we’ve had this stalemate in Washington,” Obama said. “Congress has had the time to fix this for months. This issue didn’t come out of nowhere. But we’ve been stuck watching Congress play chicken with another deadline. This should be a no-brainer. It should have gotten done weeks ago.”

Republicans responded by accusing Obama of artificially prolonging the offset argument in an effort to win political points among his college-student base and use this as an election issue.

“The only reason this issue isn’t already resolved — the only reason — is that the president wants to keep it alive a little while longer,” McConnell said. “He thinks it benefits him politically for college students to believe we’re somehow the problem.”

GOP Leaders Refute Reid’s Claim of Progress on Student Loan Bill

House Education and the Workforce Chairman John Kline, R-Minn., argued that Obama is using the student loan issue to distract from the economy.

“The statistics are clear: Half of college graduates are either underemployed or unemployed in the Obama economy, economic uncertainty is skyrocketing and job opportunities are few and far between,” Kline said. “Instead of spreading more campaign rhetoric, it’s time for the president to take the threat of an interest rate hike off the table.”

The House on April 27 passed a one-year extension (HR 4628) of the 3.4 percent interest rate, but the bill faces a veto threat because it is financed by eliminating a preventive health care fund in the 2010 health care overhaul (PL 111-148, PL 111-152). In the Senate, Republicans voted twice, on May 8 and May 24, to block action on Reid’s bill (S 2343), which would pay for a one-year extension by eliminating a tax preference for S corporations.

The top four Republicans in Congress sent a May 31 letter to Obama outlining two offset choices. But Democrats rejected those proposals, arguing that the offsets, many of which came from Obama’s fiscal 2012 or 2013 budget requests, could not be siphoned off and repurposed.

Reid then submitted his latest proposal to GOP leaders on June 7, offering two pension-related offsets. They haven’t been rejected by Republicans, but little progress has been made since then, raising doubts that Congress will be able to avert a scheduled doubling of the interest rate on July 1 for the 7 million students expected to take out loans for the upcoming school year.

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