The clock is ticking on the June 30 deadline for Congress to agree on a way to extend subsidies for federal Stafford student loans that would keep the interest rates from doubling to 6.8%. Now Speaker of the House John Boehner has said lawmakers are tantalizingly close to coming to an accord on the matter.
“We’re moving, I think, towards an agreement on a transportation bill that would also include a one-year fix on the student loan rate increase,” said the Ohio Congressman after a meeting with House Republicans on Wednesday.
Members of the Senate have already agreed on a bipartisan deal that has the blessing of the White House.
A 2006 measure gradually rolled back the interest rates on Stafford loans to their current level of 3.4%. If no extension or other agreement is signed before July 1, those rates automatically jump up to 6.8% for new borrowers.
This change would affect somewhere between 7 and 8 million students. For someone who borrows the maximum $23,000 in Stafford loans, this would add around $5,000 to the amount paid by the time the loan is repaid.
As to how the subsidies would be funded, here’s what the AP has to say:
Under the agreement, the government would raise $5 billion by changing the way companies calculate the money they have to set aside for pensions. That change would make their contributions more consistent from year to year, in effect reducing their payments initially and lowering the tax deductions they receive for their pension contributions.
Another $500 million would come from increasing the fees companies pay for the government to insure their pension plans, linking those fees to inflation.
The House had discussed putting forth an extension that paid for the program with cuts to new preventive health care programs. Meanwhile, an earlier Senate version that raised taxes on owners of some privately held corporations was blocked by opponents.
The House measure seems to involve both the Stafford loan extension and a bill recertifying federal authority to spend money on transportation initiatives, as well as collect taxes on fuel. The AP reports that this bill has been held up by disputes over environmental reviews of highway projects and a proposed oil pipeline from Canada to Texas and other issues.