Legal battle brewing over U.S. student loan debt

By Catholic Online (NEWS CONSORTIUM)
4/26/2012
Catholic Online (www.catholic.org)

Issue to become a major campaign issue in election year

A Democratic proposal to pay for extending low rates for college loans by imposing new payroll taxes on some small businesses currently exempt from taxes is drawing heat from their Republican counterparts. Democrats in both the House and Senate introduced legislation Wednesday to extend student loan rates at 3.4 percent for another year, rather than allowing them to jump to 6.8 percent July 1. The date is timed to coincide with a tour of college campuses by U.S. President Barack Obama highlighting the issue.

The date of legislation is timed to coincide with a tour of college campuses by U.S. President Barack Obama highlighting the issue.

Facebook Delicous MySpace

Twitter Stumble Digg

More Destinations

LOS ANGELES, CA (Catholic Online) - Senate Democrats may force a floor vote on the measure after Congress returns from recess next week.

The increase in college loan rates is quickly developing into a key campaign issue. Democrats hope the issue will stir usually apathetic young voters who propelled Obama to victory four years ago. It could also appeal to their middle-class parents, concerned with the rising costs of college.

Apparent Republican presidential nominee Mitt Romney says that he too, favors keeping the loan rate low for seven million borrowers.

The messy details of how to pay the estimated $6 billion cost will be left to Congress, where a fight is brewing.

Senate Minority Leader Mitch McConnell (R-Ky.) accused Obama and Democrats in a scathing speech of playing deceptive politics, proposing a funding mechanism that Republicans will oppose so they can be painted as unsympathetic to the plight of college students.

"Look, if the president was more interested in solving this problem than in hearing the sound of his own voice or the applause of college students, all he'd have to do is pick up the phone and work it out with Congress," McConnell said.

"Let's be honest - the only reason Democrats have proposed this particular solution to the problem is to get Republicans to oppose it, to make us cast a vote they think will make us look bad to the voters they need to win the next election," he said.

McConnell says the business tax would make it harder for small businesses to hire and would raid Social Security and Medicare as payroll taxes are ordinarily used to fund those entitlement programs.

In the House, which recently adopted a budget authored by Rep. Paul Ryan (R-Wis.) which did not envision extending the lower loan rate, House Speaker John Boehner (R-Ohio) told reporters that Democrats and Republicans were working on the issue.

Ryan did not answer a question about the Democratic proposal on the issue. Ryan also accused Democrats of creating the problem by passing legislation in the first place in 2007 that allowed the lower rates to expire.

"Our members are talking about the student loan problem that was created by Democrats, trying to find a responsible way" to deal with it, he said.

� 2012, Catholic Online. Distributed by NEWS CONSORTIUM.

- - -

Pope Benedict XVI's Prayer Intentions for January 2013
General Intention: The Faith of Christians. That in this Year of Faith Christians may deepen their knowledge of the mystery of Christ and witness joyfully to the gift of faith in him.
Missionary Intention: Middle Eastern Christians. That the Christian communities of the Middle East, often discriminated against, may receive from the Holy Spirit the strength of fidelity and perseverance.

Keywords: College loans, Republicans, Democrats, taxes, interest rates

NEWSLETTERS »

Rate This Article

Was this helpful to you? Very Helpful Somewhat Helpful Not Helpful at All

Would you be interested in more articles like this? Yes, I am Interested No, I am not Interested

Rate Article

1 - 5 of 5 Comments

DLL
1 year ago
If student loans account for more debt than credit cards or student loans combined than the answer is not to increase interest rates,it is to eliminate them entirely,as long as the student passes their coarses and obtains their degrees. They must pay back interest free loans as they should not default on such a loan,as that is their moral obligation.To double interest rates on student loans is to take full advantage of economically disadvantaged and economically poor students who are struggling to make their way in the world. To answer Robs question the federal government regulates interest rates to their own advantage,as now to invest in bonds or T-bills and such,one gets almost no interest,less than half of one percent. However when assisting in lending money to students or in assisting to lend any money,than they make sure they levy as a high interest rate as it is possible for our present time. That is simply usury in my book. 3.4% to 6.8% Increase in student interest rates,makes our dear Uncle Sam,Uncle Scam. Education costs are much to high as are medical costs because they are both enough to break the piggy bank of anyone.
J. Bob
1 year ago
SS insolvency 2033, Medicare 2023, SS Disability 2017. Where is this money coming from, to finance these debts.

Maybe it's time to realize a college education will not guarantee a job Maybe these easy government backed, loans are just fueling the high cost of education, just like health care.
Larry
1 year ago
And we know where the Democrat agenda gets us - more war, pushing to have those who can't afford a home buy one and then reneg on their payments which setup the collapse, owing auto companies and forcing a foreign ownership of another auto company; forcing banks to take money when they didn't want it, stimulus spending to take over businesses and reward buddies - - - taxing the very businesses that would probably hire graduating college students seems like working against best practices. With more taxes, businesses will not hire as many people which will keep more graduate on the unemployment and underemployment rolls. That's not building the economy. Too much 'fairness' attitude making those who are succeeding or trying to succeed pay!
Rob
1 year ago
How is the low rate being paid for now? And what exactly is the cost? Doesn't the government set their own interest rates? I don't exactly understand what has to be paid for. I understand that the government would lose increased interest charges, but not sure what the cost is. Need more reporting on this as to why there was a proposal to raise the rates in the first place and what exactly the costs is to this.
warren hart
1 year ago
But thankfully we already know where the Republican agenda gets us. Remember? war, bailouts, housing collapse, auto industry implosion and on and on plus they hate any safety bet including social security and medicare and call it socialism. No thanks.

Comments submitted must be civil, remain on-topic and not violate any laws including copyright. We reserve the right to delete any comments which are abusive, inappropriate or not constructive to the discussion.

Though we invite robust discussion, we reserve the right to not publish any comment which denigrates the human person, undermines marriage and the family, or advocates for positions which openly oppose the teaching of the Catholic Church.

This is a supervised forum and the Editors of Catholic Online retain the right to direct it.

We also reserve the right to block any commenter for repeated violations. Your email address is required to post, but it will not be published on the site.

We ask that you NOT post your comment more than once. Catholic Online is growing and our ability to review all comments sometimes results in a delay in their publication.

Name *

Email *

Comment *

Send me important information from Catholic Online and it's partners. See Sample

Post Comment