This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Six Bills Into One Student Loan Deal Won't Go

"The Obama administration wants to finance an extension of the income-based payment plan and not tie it to deficit reduction," said Asher. "That's a significant difference. But again, there's no rate cap. Interestingly, the Republicans' variable rate proposal in the House does have a cap." The bill introduced by Rep. John Kline (R-MN) and Virginia Foxx (R-NC) caps all Stafford loans at 8.5%. The Reed-Harkin Senate bill has caps baked into the legislation: 3.4% for subsidized and 6.8% for unsubsidized Stafford loans.

"There have been arguments from Obama and the Republicans that having no cap is O.K., because we have income based repayment plans," said Asher. "But you see costs passed on to students even in income-based plans when rates rise."

In addition, Asher said the long-term proposals that she's seen are generally worse than letting rates double, which would include the Republican Coburn-Alexander bill that came out of the Senate and would cap rates for each individual loan. But rates could rise without limit, linked to the 10-year Treasury bill.

Meanwhile the card the Republicans continue to play links the Obama plan to their own--even if the similarities are misleading. In the face of a Senate logjam, this has some appeal.

In a June 21 letter to Obama, House Speaker John Boehner (R-OH) wrote, "Without your intervention, Senate Democrats are going to double interest rates for millions of college students." He added, " The House passed a plan that mirrors your own. The differences between the House plan and yours are minor." He continued, "Unfortunately, they cannot be resolved if Senate Democrats refuse to even accept our shared approach and the need for a long-term solution."

Both sides seemed to favor sarcasm over solutions--not a good sign at this late date. "While we're glad House Republicans are paying attention to this looming problem this time around, the plan they passed doesn't solve it," said White House spokesperson Matt Lehrich. "In fact, a typical freshman could actually pay more under their plan than if Congress did nothing at all."

Rates jumped in 2006 when Republicans had control of the House and used increases as a part of a deficit reduction strategy. Democrats took back the House a year later and passed a bill introduced by Rep. George Miller (D-CA) that reduced rates for the next five years. That bill expired last year. Miller's Washington, DC press secretary for education, Tiffany Edwards, said, "We're calling on Republicans to reverse their vote that would result in the doubling of interest rates on July 1."

2 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
AAPL $124.75 0.00%
FB $80.78 0.00%
GOOG $524.05 0.00%
TSLA $206.79 0.00%
YHOO $44.45 0.00%


DOW 17,826.30 -279.47 -1.54%
S&P 500 2,081.18 -23.81 -1.13%
NASDAQ 4,931.8150 -75.9760 -1.52%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs