The House of Representatives on Friday approved a bill (H.R. 4628) that would freeze the interest rate on new subsidized Stafford student loans at 3.4 percent for one year. The vote was 215-195.
The interest rate is scheduled to double to 6.8 percent on July 1 unless Congress intervenes. The Senate is expected to take up the issue next week in a bill introduced by Senate Majority Leader Harry Reid (D-NV).
The primary difference in the House and Senate bills is how they would pay for the estimated $6 billion the freeze would cost.
For its part, the House proposes to cut a fund included in the Affordable Care Act that helps prevent chronic diseases. The White House on Friday issued a Statement of Administration Policy threatening to veto the House measure over the proposed offset.
The Senate bill would offset the cost by eliminating a provision that allows some small businesses, classified as S corporations, to avoid certain payroll taxes.
ACE and 41 other higher education associations sent a letter to the House on April 26, expressing strong support for the interest rate freeze and praising Congress for not raiding other student aid programs to pay for it.
“We particularly appreciate the effort made by Democrats and Republicans in both chambers to seek offsets from outside of student financial aid,” the groups wrote. “In recent years, a number of benefits within the student loan programs have been eliminated in order to pay for other programs or to contribute to deficit reduction. Through a combination of reductions or eliminations of other student aid programs, we have witnessed an increased financial burden on our students.”