|Sponsor||Rep. Biggert, Judy|
|Committee||Education and the Workforce|
|Date||April 27, 2012 (112th Congress, 2nd Session)|
|Staff Contact||Sarah Makin|
On Friday, April 27, 2012, the House is scheduled to consider H.R. 4628, the Interest Rate Reduction Act, under a closed rule. The bill was introduced on April 25, 2012, by Rep. Judy Biggert (R-IL) and referred to the Committee on Education and the Workforce, which took no action on the bill.
H.R. 4628 would prevent interest rates on new federally subsidized Stafford Loans made to undergraduate students from increasing from 3.4 percent to 6.8 percent on July 1, 2012. The bill would extend the 3.4 percent rate until July 1, 2013.
The cost of a one-year extension of the lower rate is $5.985 billion, and in order to pay for this cost, the bill would repeal the unobligated balance of the “Prevention and Public Health Fund,” a slush fund in the president’s government takeover of health care law.
The remaining savings generated from repealing the $11.9 billion slush fund will be put toward deficit reduction.
In 2007, the College Cost Reduction and Access Act was signed into law. In 2006, as part of their “6 for ‘06” campaign agenda, Democrats promised to cut student loan interest rates in half.
However, once gaining control of Congress in 2007, Democrats realized it was too costly to cut all student loan interest rates in half. Instead, Education & Labor Committee Chairman George Miller (D-CA) and then-Speaker of the House Nancy Pelosi (D-CA) proposed temporarily reducing interest rates for undergraduate students receiving subsidized Stafford loans.
The College Cost Reduction and Access Act incrementally phased down interest rates for subsidized Stafford Loans made to undergraduate students over four academic years from 6.8 percent to 3.4 percent. Per the law, interest rates are scheduled to return to 6.8 percent on July 1, 2012.
As the expiration date crept closer, Democrats did nothing to address the impending interest rate increase during the 111th Congress, despite taking action to terminate the private sector federal loan program to help pay for the president’s government takeover of healthcare law.
In 2011, the House approved H.R. 1217 with bipartisan support to repeal the Prevention and Public Health Fund – a slush fund used by the Secretary to fund her health care priorities.
The cost for a one-year extension is $5.985 billion. This is paid for by repealing the “Prevention and Public Health Fund,” a slush fund in the president’s takeover of healthcare law.