The Obama administration on Tuesday brushed off Republican proposals to pay for the $6 billion extension of the reduced-rate student-loan program, which expires July 1.
“We’re not going to trade off student loans for other vital, vital programs,” Biden said after meeting with 10 college presidents to discuss an administration effort to increase transparency in the information students receive on loan packages. It was unclear, however, whether Biden was referring to the recent proposals in the letter or an older proposal, since scrapped, that would have gutted a preventive health-care program created under President Obama’s health-care law.
The looming deadline presents a tricky proposition for Obama, who has aimed his reelection message at the middle class and called the student-loan issue critically important for the 7.4 million people who have the subsidized Stafford loans. In appearances on college campuses, the president has railed against the spiraling costs of higher education as he appeals to younger voters.
Both the administration and GOP leaders want to freeze the interest rate at the current 3.4 percent and avoid an average fee hike of $1,000 per student when the rate doubles to 6.8 percent. But the two sides remain deadlocked over how to pay for the plan.
On Capitol Hill, Republicans have charged that Obama has made no efforts to negotiate an end to the impasse, despite repeatedly demanding that Congress deal with the student loan issue in a series of speeches with campaign overtones.
Those criticisms have mounted since GOP leaders sent the White House their letter last week only to be met with days of silence from the administration.
Senate Minority Leader Mitch McConnell (R-Ky.) on Tuesday called the White House’s approach to the issue “nothing short of surreal,” contending that Republicans have been “crystal clear” about their desire to resolve the issue quickly.
“The only people dragging their feet on this issue are over at the White House,” he said.
In their letter, Republicans offered alternatives for paying for the student-loan freeze. In one proposal, the cost would be offset by increasing the amount federal workers pay for their retirement.
In the other, a freeze on loan rates would be paid for through a combination of items: shortening the period during which part-time students would be eligible for federally subsidized loans; limiting the ability of states to recoup Medicaid costs through taxes on providers, which would lead to a slight reduction in Medicaid use and, therefore, lower costs to the federal government; and improving coordination with states and local governments to reduce Social Security overpayments.
Education Secretary Arne Duncan expressed confidence that an agreement would be reached in time, but he declined to address the GOP proposals directly.
“If they are not serious proposals, they are not ones we will take seriously,” Duncan said. “We hope and expect Republicans to work with us — not to talk about it, but to fix it.”
Congressional Democrats insisted the Republican proposals were a ruse to make it appear that they were willing to negotiate in good faith, even as they were prepared to let the rate rise and blame Democrats for the hike.
The letter arrived the same day that House Speaker John A. Boehner (R-Ohio) told GOP colleagues in a private meeting that he did not expect a compromise before the rate rises on July 1.
He assured them that Democrats would take the hit for the rise — noting that the GOP House adopted a bill, though it could not advance in the Senate. He added that the rate could be lowered retroactively if the deadline passes and said the GOP should not let the Democrats use the date to force a deal, said a person who was present at the meeting but was not authorized to speak about the matter publicly.
“This is all just a game that’s being played,” Senate Majority Leader Harry M. Reid (D-Nev.) told reporters Tuesday. “You can’t have someone sending a letter one day saying let’s sit down and talk, when they say to their caucus, we’re not going to extend this reduction.”
