GOP leaders give Obama two options on student loan rates

Republican leaders in Congress on Thursday offered President Obama new proposals to keep student loan rates from doubling on July 1.

In a letter to Obama, four top GOP lawmakers said they could support either of the two options they had proposed to help offset the costs of a rate extension, and that their ideas could be found in the White House’s fiscal 2013 budget.

One of the proposed offsets requires federal employees to contribute more to their pension funds, an idea that has historically drawn fire from Democrats.

The other option would combine limits on subsidies received by student loan recipients, changes to a tax on Medicaid providers and a plan to rein in Social Security overpayments.

“There is no reason we cannot quickly and in a bipartisan manner enact fiscally responsible legislation,” House Speaker John Boehner (R-Ohio), House Majority Leader Eric Cantor (R-Va.), Senate Minority Leader Mitch McConnell (R-Ky.) and Senate Minority Whip Jon Kyl (R-Ariz.) wrote to the president.

{mosads}The GOP letter comes as Republicans and Democrats in Washington have sparred for weeks over how to extend interest rates for federal student loans, which will double at the end of June unless Congress acts.

According to federal figures, more than 7 million borrowers would be affected if the rates rose from 3.4 percent to 6.8 percent, and a one-year extension of current levels would cost roughly $6 billion.

The White House did not immediately respond to a request for comment on the letter.

Congressional Democrats this week have hammered the GOP for concentrating on issues like an abortion proposal that received a House vote on Thursday, instead of issues such as student loan rates and the economy.

Sen. Charles Schumer (D-N.Y.) criticized Boehner for saying in a GOP conference meeting on Thursday that Congress would likely not be able to find a student loan solution over the next month, and suggesting that the rates could be fixed retroactively.

In their Thursday letter, the four GOP lawmakers said that they would prefer to enact a House-passed proposal that would pay for the student loan extension by scrapping a public health prevention fund in the healthcare reform law.

But Senate Democrats have pushed their own proposal, which would force some business owners to pay more in payroll taxes. Senate Republicans have already blocked that plan, and the four GOP leaders wrote on Thursday that it “is unacceptable to the House of Representatives.”

“But in the interest of finding common ground on a way to pay for a one year extension of the current student loan interest rate we are open to other solutions that we have all supported in the past,” Boehner, Cantor, McConnell and Kyl added.

Congress already voted this year to force new federal workers to contribute more to their retirement funds, in the package to extend the current payroll tax cut.

Some prominent Democrats — like House Minority Whip Steny Hoyer, Rep. Chris Van Hollen and Sen. Ben Cardin, all from Maryland — slammed that provision, and eventually voted against the payroll tax cut extension. 

Still, the vast majority of congressional Democrats supported the package continuing the payroll tax cut, which was a White House priority.