Sen. Harry Reid to unveil bill freezing student loan interest rates

By Karoun Demirjian

Tuesday, April 24, 2012 | 2:14 p.m.

Before President Barack Obama returns from his national tour to push Congress to tackle rising student loan rates, Sen. Harry Reid plans to have a bill ready to do just that -- but he’s keeping very quiet on the details.

Reid told reporters Tuesday he expected to release a bill in the next 24 hours that would hold the current interest rate for government subsidized loans at 3.4 percent. Absent some sort of congressional action, those rates are set to double to 6.8 percent on July 1.

But more importantly, Reid added that his legislation would offset the cost to government.

Obama has been pushing a bill from House Democrats that would freeze the current student loan interest rate, a change that would save the average Nevada student $982 over the life of their student loans, but cost the government about $6 billion a year.

That trade-off doesn't sit well with Republican leaders in the House, who have bristled at the seemingly incompatible options.

“We must now choose between allowing interest rates to rise or piling billions of dollars on the backs of taxpayers,” House Education and Labor Committee chair John Kline said Monday.

But there’s pressure on the House Republicans to act from other ranks in their party.

On Monday, Mitt Romney -- the presumptive Republican presidential nominee -- said he wanted to see Congress freeze the interest rate for government education loans, without any requirements to pay for them.

On Tuesday, Senate Minority Leader Mitch McConnell echoed those sentiments, with a cost qualifier.

“I don’t think anybody thinks the rate should be allowed to rise,” McConnell said. “The question is, how do you pay for it and how long do you do this for?”

Reid seemed confident he’d found an answer to the pay-for question.

“It won’t be the Buffett rule, you wait and see,” he told reporters.

In the past, Reid has reverted to at least the spirit of the Buffett Rule -- Obama’s Warren Buffett-inspired maxim that millionaires and billionaires ought to pay a higher tax rate than the middle class -- as a way of raising revenue to cover the cost of various federal ventures. But the surtaxes on the wealthy he’s introduced haven’t been any more popular with Republicans than the Buffett Rule was itself: Only one, Sen. Susan Collins of Maine, supported it when it came up in the Senate last week.

But while he promised the offsetting will be different this time, Reid did not suggest his financial accounting would be any more palatable to Republicans than the Buffett Rule had been.

“I think the proper question is, is it something Grover Norquist would accept," Reid said, invoking the author of the anti-tax pledge to chide his opponents' unwillingness to raise taxes. "He seems to be the marker for Senate Republicans. We’ll see.”