WASHINGTON — There is a little bit of overlap between student loan interest rate reform proposals from Minnesota Rep. John Kline and President Obama, but not enough for the latter to sign the former's into law.
The White House threatened to veto Kline's interest rate bill on Wednesday, a day before the House is set it take it up. Kline's bill would align student loan interest rates with the cost of federal borrowing, plus a couple of points. It's similar to a plan Obama proposed last month, only the rates are set a bit higher, they vary from year to year, and Kline's bill doesn't fund additional college affordability efforts Obama supports.
According to the White House's formal "Statement of Administration Policy":
While the Administration welcomes action by the House on this issue, H.R. 1911 is the wrong approach. First, the bill would not guarantee low rates for today's students. A rate that continues to vary after the loan has already been taken out would create uncertainty and lessen transparency for students and their families who are making decisions about borrowing for college. Second, the bill's changes would impose the largest interest rate increases on low‑ and middle‑income students and families who struggle most to afford a college education. Third, the bill does not include the President's proposal to extend repayment options to borrowers who have already left school and often face the same debt burdens as current and future students. Finally, the Administration believes that student loan interest rates should not be raised to reduce the deficit.
The White House said advisers would recommend an Obama veto if the bill passed "in its current form," which implies room for compromise.
Congress has until July 1 to pass a student loan interest rate fix, since interest rates on federal subsidized loans are set to double that day. Many congressional Democrats want to extend the current rates for two years, delaying long-term reform until 2015.
Update, 4:25: Kline responded in a statement, saying: "Today’s announcement proves the president would rather pick a partisan fight with Congress instead of work in good faith on a bipartisan solution. The president’s unfortunate position does not alter our intent to advance the bill through the legislative process or our resolve to develop a long-term solution that both the House and the president can support."
Devin Henry can be reached at dhenry@minnpost.com.