Senate Minority Leader Mitch McConnell (R-Ky.) said Tuesday ObamaCare is a driving reason for higher student loan rates.
“Rates are going up, and the tuition is going up so [students] have to pay back more at a higher rate … all because of something young people had nothing to do with — and that’s the passage of ObamaCare,” McConnell said on the Senate floor. McConnell said that part of the Affordable Care Act, also known as ObamaCare “abolished the student loan program.”
As part of the healthcare law, Congress stopped allowing private banks to provide student loans. All student loans are now federal loans, which McConnell argues has led to higher rates.
He said the administration pushed a policy that allowed the federal government to take over the student loan program and raised the interest rates.
He added that Medicaid cost increases associated with the healthcare law have forced states to raise tuition rates, also negatively affecting college students.
Rates on federally backed student loans are set to jump from 3.4 percent to 6.8 percent in July. Congress passed a bill keeping the rates at 3.4 percent last year, but it expires next month.
Before McConnell spoke, Senate Majority Leader Harry Reid (D-Nev.) said Tuesday that the Senate “must move by the end of June to keep student loan rates low.”
“If we do nothing, it will double the rates,” Reid said on the Senate floor Tuesday. “If we do what the House wants, it will triple the rates, so we can’t do that.”
The House has approved legislation that would peg federal student loan rates to the rate on the 10-year Treasury note plus 2.5 percent. The rate would be variable and would reset each year, although students could package all their loans into a fixed-rate loan after graduation. The GOP bill also caps the rate at 8.5 percent for most students.
Reid argued the House bill would add $6,500 to the average student loan bill.
He called on the Senate to approve legislation sponsored by Sens. Jack Reed (D-R.I.) and Tom Harkin (D-Iowa). Their Student Loan Affordability Act, S. 953, would freeze need-based student loan interest rates for two years while Congress works on a long-term solution. Reed said lawmakers need the extra time because Congress is not set to consider the reauthorization of the Higher Education Act.
Reed and Harkin would pay for their bill by ending three tax breaks. Specifically, it would limit the use of tax-deferred retirement accounts, restrict “earnings stripping” by expatriated entities and close an oil and gas industry tax break by treating oil from tar sands the same as other petroleum products.
“I will do everything I can to have a vote on our bill this week,” Reid said.
McConnell said the House Republican bill isn’t too different from a plan proposed in President Obama’s 2014 budget. He suggested that Obama stop “campaigning” and start working with Republicans to “bridge the relatively small differences” between the two plans.
“We’re not too far apart on this student loan issue,” McConnell said. “There is no reason for the president to hold campaign-style events. … The plan we put forward is pretty similar to his own.
McConnell criticized Democrats and specifically Obama for trying to politicize the issue. In a speech last week, Obama called on Congress to act to stop the student loan hike.
“If the president were really serious about getting this done, he would’ve spent that time on Friday ringing up senators to see how he could bridge our relatively small differences — not bashing Congress,” McConnell said. “So the president has a choice to make. Does he want to push some campaign issue for 2014, or does he want to address the problem here and prevent this rate increase?”