Jimmy Fallon and President Obama Slow Jam Student Loans
Student loan policy sounds so much better when put to smooth jazz. Even better when policy is slow jammed like when the President appeared on Jimmy Fallon last night.
But smooth jazz doesn't fully cover the rougher edges of this debate. In 2007, Congress passed the College Cost Reduction and Access Act which lowered interest rates on federal student loans from 6.8 percent to 3.4 percent. The lower rates are scheduled to expire on July 1 unless Congress enacts an extension.
This was supposed to be a temporary reduction in loan rates but as with most things in Washington, temporary quickly becomes permanent (see DocFix). The debate is less around the rates themselves and more around how to pay for the cost of an extension which is estimated to be $6 million next year. The White House admitted yesterdaythat they don't have an offset strategy as of yet which in turn has fueled Republican concerns passing an extension without actually paying for it. Rep. Paul Ryan predicted this all the way back in 2007.
Even if a temporary extension passes this year, it just punts the issue to next year when students would once again face an increase in interest rates. In other words, this could quickly become an annual problem unless Congress and the Administration come up with a permanent fix.
4/26 update at 2:30pm. New America Foundation's Jason Delisle has a must-read post which puts some of these numbers into perspective.
The House Republicans also introduced a bill sponsored by Rep. Judy Biggert, R-Ill., which would pay for the temporary extension by cutting a portion of the health care law called the "Prevention and Public Health Fund."