Traverse City Record-Eagle

Opinion

June 12, 2012

Another View: Student loan solution possible

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A proposal by Republican leaders in Congress has the potential to break a stalemate that threatens to double the interest rates paid by those with student loans.

Now it's time for both sides to find a bipartisan solution to fund the lower rates.

Both parties know the rates should be held down at a time students are saddled with historically high college loan debt and face uncertain job prospects upon graduating. The loan rates are set to jump from 3.4 percent to 6.8 percent on July 1 if nothing is done.

Up until now, the two leading proposals for funding the lower loan rates were both doomed because of philosophical differences between the parties.

The GOP House had passed a bill that would keep the loan rates low by using money from a health fund that helps pay for preventive care such as breast cancer screenings. Democrats were firmly opposed.

Likewise, Republicans were as steadfastly opposed to a Democratic plan in the Senate that would have paid for the loan-rate cut with a higher tax on business executives making more than $250,000 a year.

GOP leaders recently sent a letter to President Obama outlining two new alternatives for paying for the lower loan rates.

One would slightly boost the amount paid by federal employees for their retirement. The other would find money by lowering the amount of time part-time students could enjoy federally-subsidized loan rates combined with other items.

The offers provide a framework for the two sides to find a solution.

The GOP suggestion to fund the reduced loan rates with federal employee contributions may be appealing. President Obama had already made budget recommendations that suggested a 0.4 percent increase in federal employee contributions.

Whether it's that idea or a combination of funding sources, Congress should act this month. Republican leader John Boehner told his colleagues that if an agreement can't be reached by the July 1 deadline, Congress — or next year's new Congress — could always find a solution and make it retroactive.

But there's no reason to allow the rates to jump next month with hopes of the problem being dealt with later. Even in the partisan rancor of an election season, both parties know the loan rates should be kept down and should be able to find a solution they can both live with.

The Free Press Mankato, Minn.

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