WASHINGTON (AP) — The White House pressed Republicans Monday to back Democratic legislation preventing interest rates on federal student loans from doubling in July as the two parties remained deadlocked over how to pay for the move.
"As the economy continues to recover, and at a time when market interest rates are at historic lows, students who rely on loans to finance postsecondary education should not be burdened with additional college debt," the White House said.
The statement, which seemed aimed at raising the discomfort level among GOP senators, came as the Senate debated a $6 billion Democratic bill keeping today's subsidized Stafford loan interest rates of 3.4 percent from doubling for another year.
Republicans back freezing the interest rates too, but oppose how Democrats would finance their measure. Democrats would force owners of many privately owned companies to pay more Social Security and Medicare payroll taxes.
"They'd like to raise money in the middle of the largest recession we've had since the Great Depression on job creators," said Sen. Lamar Alexander, R-Tenn.
Alexander has introduced a GOP version paid for by eliminating a preventive health fund created by President Barack Obama's 2010 revamping of the nation's health care system. Republicans are demanding a vote on their alternative measure.
Republicans touted a letter sent to Senate leaders last week by 37 groups representing businesses from architects to wine wholesalers, saying the Democratic plan would be "less clear and less enforceable" than current law but could also end up increasing payroll taxes on businesses already complying with the law.
The election-year standoff affects 7.4 million students, whose Stafford borrowing costs would rise by an average $1,000 over the lives of their loans if interest costs doubled.
The White House has threatened to veto a House-approved GOP bill similar to Alexander's. Administration officials and congressional Democrats say they oppose cuts in preventive health programs.
With presidential and congressional elections in November, neither party wants to be seen as causing students' college expenses to grow. Because neither appears to have the 60 votes needed to push its version through the Senate, it seems likely they will have to find a compromise way to pay for the effort.
Stafford loans are made to low- and middle-income students. The Department of Education estimates students will borrow $31.6 billion in Stafford loans in the year beginning July 1, average $4,226 for each student.