SummaryPays for extending reduced Stafford college loan interest rates until the middle of 2013 by cutting preventive health care funds.
Details & Argument
The legislation would allow the interest rate on undergraduate Federal Direct Stafford Loans to remain at 3.4 percent through July 1, 2013. Otherwise, the rate would have doubled, to 6.8 percent, on July 1, 2012.
To offset the $6 billion increase in the federal deficit that would result, the legislation would end funding for the Prevention and Public Health Fund. According to the Department of Health and Human Services, the fund is used in a broad range of state and local programs for "promoting wellness, preventing disease, and protecting against public health emergencies."
Rep. Judy Biggert, R-Ill., who sponsored the legislation, said on the House floor, "The bill would eliminate the remaining $12 billion from the so-called Prevention and Public Health Fund, which, in truth, is nothing more than an open-ended fund that has no clear oversight or purpose. At best, this fund serves only to circumvent Congress's annual appropriations responsibilities by granting, in perpetuity, the Secretary of Health and Human Services unabridged discretion to direct billions of taxpayer dollars under the loose label of prevention programs. I should note that the President, himself, acknowledged that the prevention fund is bloated when he requested a $4 billion cut to the program in his FY13 budget. By reclaiming a portion of the administration's misguided health care law through the elimination of this blank-check program, my legislation would extend lower rates for college loans, granting relief to our young people without raising taxes on their potential employers."
Rep. Lois Capps, D-Calif., opposed terminating the Prevention and Public Health Fund as a condition for holding Stafford loan rates steady. "It appears that we now all agree that we cannot let student loan rates double come this July--that's good--but I wish we were also looking for a bipartisan solution to funding the continuation of low rates on student loans," she said. "Instead, the majority is engaging in another partisan attack on public health funding, funding that improves the lives of Americans and the productivity of our workforce. ... The Public Health and Prevention Fund is a critical investment in both our Nation's health and our economic future, especially for women and children."
The legislation passed the House, 215-195, with 202 Republicans and 13 Democrats voting in favor and 30 Republicans and 165 Democrats voting in opposition. Ten Republicans and 12 Democrats did not vote.
The Middle-Class Position
The middle-class position on this bill is opposed. The conservative shenanigans on this issue would be comical if it were not for the deadly serious ramifications of saddling students with higher interest rates for their loans. If Stafford loan interest rates doubled, more than 7.5 million students would be affected, and an average student would end up owing an additional $5,000 on his or her loan.
Republicans insisted on cutting funding for preventative health care to offset the cost of freezing the interest rate level, in one of their numerous assaults on health care reform. An alternative approach to covering the cost proposed by Senate Democrats would close a loophole that allows some high earners from avoiding paying payroll taxes on some of their income. But conservatives reject this type of compromise.
When Rep. Paul Ryan, R-Wisc. and the architect of the Republican budget, was asked at a student town hall meeting if he would "support closing corporate tax loopholes to pay for" maintaining student loan rates at their current level, Ryan said, "Nope," adding that since the student loan bill was "more spending, let's cut spending that is lower-priority spending to address this higher-priority need."
In the conservative mind, improving the health of the American public is "lower priority" than, say, protecting multimillionaires from tax increases. Instead of holding this reform hostage to reductions in preventive health, the Congress would have been better advised to consider far greater steps to make college affordable.