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October 7, 2015

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Reid parries GOP over how to pay to keep student loan rates low

While the president spoke to crowds at UNLV, the war of words over student loans continued in Congress as Sen. Harry Reid responded to a letter from Republican leaders pushing two new proposals with an epistolary twofer of his own.

Reid laid out two suggestions of how to pay for a one year rate-freeze on student loans with changes to the way pension liabilities are calculated and pension guarantees are funded.

Republicans and Democrats, who in principle agree that the student loan rate should not be allowed to double from 3.4 percent to 6.8 percent, have stalemated over how to pay for the $6 billion per year cost of the legislation.

The Senate already voted down a Republican proposal to cover the cost by axing a preventative care fund under the health care law and a Democratic proposal to close a corporate tax loophole that lets certain shareholder companies avoid paying income taxes.

Reid hasn’t responded particularly warmly to more recent suggestions from Republican leaders to pay for the rate freeze either by requiring federal employees to contribute more to their pension plans, or limit the time-frame in which students would be eligible to draw on federal education loans – even though the president had endorsed modified versions of those proposals in his own fiscal 2013 budget.

“I don’t have a lot of feeling for what they’re trying to do because on the same day that they sent the letter, Speaker Boehner said that he was satisfied with not extending the reduction and interest rates for student loans,” was Reid’s response to the Republican leaders’ suggestions, sent in a letter to him in late May.

“It’s all just a game that’s being played,” he added.

But Reid put the ball back in the Republicans’ court Thursday, suggesting that a student loan interest rate extension be paid for either by tweaking the formula by which employers calculate their pension liabilities – a move Reid says would lead to them claiming fewer tax deductions – or increasing the premiums employers pay for insuring pensions through the Pension Benefit Guaranty Corporation.

The proposals actually generate more money than necessary to pay for the student loan rate freeze, by the Democrats’ count – and technically, aren’t entirely new.

The first was proposed to pay for the highway transportation bill that passed the Senate with flying colors in May, but has gotten held up as House and Senate members try to iron out the difference between their versions of the legislation.

But that fact let Reid take a dig at what identifies as Republican recalcitrance.

“My preference would be to use the funds raised by these two proposals to pay for both measures, and pass them immediately,” Reid wrote. “However, if House Republicans are still not ready to pass the transportation jobs bill, I suggest that we use part of these offsets to pay for the student loan legislation and pass that measure immediately so that middle class families will not see their interest rates double on July 1st.”

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