Club For Growth To GOP: Let Student’s Interest Rates Spike

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Reflecting divisions within the congressional GOP, the conservative group Club for Growth is warning Republicans to vote against any measure that would keep student loan interest rates from doubling a few weeks from now — even one sponsored by their own leaders.

Before 2007, the interest rate for subsidized Stafford student loans was 6.8%, but House Democrats voted that year to lower the rate to 3.4% for the next four years. This bill would extend that rate for new loans for another year, costing taxpayers $6 billion. It’s bad policy to subsidize student loans in the first place, but the net result will likely drive up tuition costs for all students, making the overall cost of the bill much higher than its current price tag. House Republicans want to offset this subsidy by repealing the Prevention and Public Health Fund that was created with the passage of ObamaCare. That fund should indeed be repealed, but fiscal conservatives should only try to repeal the entire law, not just parts of it. And for the most part, the offset is irrelevant. Fiscal conservatives should not be promoting bad policy, which this bill contains.

Republicans introduced their bill despite these divisions because they fear driving young voters back into President Obama’s political coalition this election year. A Democratic alternative would pay for maintaining the low interest rates by eliminating a loophole that allows certain wealthy professionals to avoid the Medicare payroll tax. House Republicans are set to vote on the measure late Friday morning, barring a revolt within the GOP conference.

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