WASHINGTON –Sen. Mike Johanns (R-Neb.) signed on to cosponsor the Student Loan Interest Rate Reduction Act of 2012, legislation extending the current 3.4 percent interest rate on subsidized college loans for one year.
“No amount of campaigning is going to change the fact that more than half of recent college graduates are either unemployed or underemployed,” Johanns said. “Everyone agrees on the problem, but it would be irresponsible to raid the Social Security and Medicare Trust Funds yet again to pay for a fix. The legislation I’m cosponsoring is a responsible fix that lets us move on to the bigger issue – getting our economy going again.”
The legislation, introduced by Sen. Lamar Alexander (R-Tenn.) is identical to legislation introduced in the House and is fully paid for by eliminating what some have called a multi-billion dollar slush fund in the President’s health care law. The slush fund’s remaining $6 billion will go to deficit reduction. President Obama has previously signed legislation that reduces this fund to pay for other spending.
The alternative legislation extending the lower loan rates introduced by Sen. Harry Reid (D-Nev.) is paid for by further depleting the Social Security Trust and Medicare Funds, which are already projected to be insolvent by 2033 and 2024 respectively.
In 2007, the Congress temporarily lowered interest rates on Stafford Subsidized Undergraduate Loans from 6.8 percent to 3.4 percent for four years. The law expires and the interest rate doubles back to its original level this July.