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US Senate Seeks [Medical] Student Loan Solution

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Will Medical and Health Sciences Students Benefit?

By Children’s Home Society of Florida Foundation

The Senate was still unable to craft a compromise last week on efforts to maintain the current student loan interest rate. If there is no action before July 1st, the student loan interest rate on most loans will increase from 3.4% to 6.8%. Both major parties have proposed a one year freeze on the interest rate at 3.4%. However, the leaders from the two parties have different opinions on how to offset or pay for the $6 billion cost of that interest rate freeze.

Democrats

The Democratic proposal by Senate Majority Leader Harry Reid (D-NV) carries the title Stop the Student Loan Interest Rate Hike Act of 2012 (S. 2343). It failed on a vote of 51-43 last week, nine votes below the required 60-vote threshold for passage.

Republicans

The Republican alternative is the Interest Rate Reduction Act (S. 2366). It also failed on a vote of 34-62.

Both Sides

Senate Democrats proposed requiring Subchapter S corporations with three or fewer members and income levels of $200,000 per year ($250,000 for joint filers) to make payroll tax contributions on all income. The Republican solution is to repeal the Prevention and Public Health Fund.

Response

In response to the vote, White House Press Secretary Jay Carney stated, “For the second time this month, they voted to ask millions of students to pay an average of $1,000 each rather than close a loophole that allows the very wealthy to avoid paying their fair share.”

Assessment

Senate Republican Leader Mitch McConnell (R-KY) stated, “In order to cover the cost of a temporary rate freeze that both parties want, they proposed to divert $6 billion from Medicare and to raise taxes on small businesses – hurting the very companies we are counting on to hire today’s college graduates.”

Editor’s Note: There is very broad support for a one year extension and it is an election year. While the parties have been unable to agree on offsets during the past year, eventually they may choose to pass the bill without offsets. It is quite possible that will happen with the student loan interest freeze.

Conclusion

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