College students might well see their student loan rates double this summer as Congress fails to reach agreement on a plan to keep them steady.
Sen. Ben Nelson, a Democrat, criticizes Republicans for blocking debate on a Democratic plan to pay for the proposal to keep the interest rate on federal direct Stafford loans at 3.4%, rather than jumping to 6.8%.
“The bill would have kept student loan rates low and resulted in significantly less debt for millions of American college students and it would have been done so by closing a tax loophole,” Nelson says.
The United States Senate voted 52-45 on a plan proposed by Senate leader, Harry Reid of Nevada. The proposal needed 60 votes to move forward to floor debate. If Congress fails to act by July 1st, the interest rate on federal direct Stafford loans would jump from 3.4% to 6.8%. Approximately 7.4 million students would be affected, including more than 23,000 in Nebraska.
Reid proposed changing how certain corporate income would be considered, shifting it from profits to wages. Democrats say the proposal would close a loophole that has allowed corporations to avoid paying billions of dollars in owed taxes. Nelson says Republicans have supported closing the loophole in the past.
Sen. Mike Johanns, a Republican, says he’s not sure how Republicans have thought about the proposal in the past, but he opposes it. Johanns contends the proposal would divert the payroll tax from paying for Social Security and Medicare to subsidizing student loan rates.
“What you’re ending up with is a system where you’re trying to transfer that money to another use and I just don’t think that’s right,” Johanns remarks.
Republicans have suggested paying for the extension through doing away with a health care fund.
AUDIO: Brent Martin reports [:50]