Senate Democrats, led by Sen. Patty Murray, D-Wash., say their budget proposal would permanently keep the student rates low. But their budget document doesn't explicitly cover the $6 billion annual cost. Instead, its committee report included a window for the Senate Health, Education and Pension Committee to pass a student loan-rate fix down the road.Mind you, we're not talking about the government paying students' tuition. We're not talking about free money. We're talking about how much interest students will pay as they repay loans, and as Rep. Peter Welch (D-VT) points out, the government borrows at two percent. In that light, paying 6.8 percent interest is mildly extortionate. So when politicians or pundits or AP reporters ask how the government is going to pay for keeping interest rates at 3.4 percent, they're not talking about laying out new money, they're talking about cutting revenue. Compare the fretting about this revenue coming in from students who need loans to afford college with the talk from Republicans when the question is keeping taxes ridiculously low for billionaires or giant corporations and you'll get a strong reminder that Republicans don't hate all revenue or want to cut everyone's taxes—that's reserved for the powerful.
But so far, the money isn't there. And if the committee wants to keep the rates where they are, they will have to find a way to pay for them, either through cuts to programs in the budget or by adding new taxes.
"Spending is measured in numbers, not words," said Jason Delisle, a former Republican staffer on the Senate Budget Committee and now director of the New America Foundation's Federal Budget Project. "The Murray budget does not include funding for any changes to student loans."
Once again, federal student loan interest rates are set to double from 3.4 percent to 6.8 percent (on new loans; existing ones wouldn't be affected). Last year's fix wasn't great, and that happened in the pressure of an election year in which President Obama campaigned on the issue. That means this year, with student loan defaults already hitting a new high, students are likely to be really screwed, paying up to $5,000 more interest than they would at the current rate. In our ridiculous political system, the people in power are talking about how much it would cost: