House okays cutting interest on some student loans
By ASSOCIATED PRESS
Published January 18, 2007
WASHINGTON - The Democratic-controlled House voted overwhelmingly Wednesday to cut interest rates on need-based student loans.
The strong bipartisan vote in the House came as a dispute between Republicans and Democrats in the Senate derailed ethics and lobbying reform that the new Democratic majority had made their first legislative initiative.
The House legislation, passed 356-71, would slice rates on the subsidized loans from 6.8 percent to 3.4 percent in stages over five years at a cost to taxpayers of $6-billion. About 5.5-million students get the loans each year.
Though clearly popular, the legislation sparked a debate over where to set the nation's education priorities: helping college graduates pay off their debts or expanding federal grants for low-income students.
Democrats conceded Congress needs to do more to make college more affordable. But they said reducing student loan rates was a significant step toward tuition relief.
The Bush administration opposes the bill, and Senate Democrats plan to bring up a more comprehensive bill that could complicate its prospects.
The House bill aims to reduce the $6-billion cost by reducing the government's guaranteed return to lenders that make student loans, cutting back the amount the government pays for defaulted loans and requiring banks to pay more in fees. Lending institutions opposed the bill.
While the legislation matched the Democrats' pledge to pass the student loan measure in the first 100 hours of legislative action by the new Congress, it fell short of their broader goal of lowering interest rates for parents who take out college loans for their children. During the 2006 congressional campaigns, Democrats also said they wanted to increase the maximum Pell grant award from $4,050 to $5,100. Pell grants go only to the neediest students and do not have to be paid back.
The Senate ethics legislation collapsed after Republicans objected to Democratic refusal to consider an amendment that would have given the president a modified version of line-item veto authority.
Meanwhile, a bipartisan group of senators announced a nonbinding resolution opposing President Bush's planned troop buildup in Iraq, and the Senate moved closer toward passing legislation that would raise the minimum wage.
[Last modified January 18, 2007, 00:31:48]
[an error occurred while processing this directive]