In a visit to the University of Washington campus, U.S. Sen. Patty Murray called on Congress to keep interest rates on federal student loans low, but criticized a GOP measure that would do so by cutting a disease-prevention and public-health fund
The national political stage moved briefly to the University of Washington campus Friday when U.S. Sen. Patty Murray met with UW students and made a plea for Congress to keep the interest rate on newly issued federal student loans from doubling.
Meanwhile, in Washington, D.C., on Friday, the House of Representatives passed a Republican-backed measure to do that very thing. President Obama threatened to veto it.
At issue is where the money to keep the rates low should come from.
Murray and Sen. Maria Cantwell are supporting a Senate bill that would tax higher-income households to fund the loan program.
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The Republican-supported House measure would preserve the low interest rate by using money from a disease-prevention and public-health fund in the health-care-overhaul law Congress passed in 2010.
Speaking in the atrium of UW’s Paul Allen Computer Science and Engineering building, Murray — flanked by three students who would be affected by the increase — decried the Republican measure for going after preventive-health programs. The measure she supports would close tax loopholes for some wealthy business owners.
The loans at the heart of the debate are called subsidized Stafford loans, and their interest rates will double in July, affecting 7.4 million undergraduates nationwide — 100,000 in Washington state, according to Murray’s office. The increase could add $1,000 to the cost of an average loan, which is available only to low- and middle-income students.
The legislation is not retroactive, and interest rates on loans already issued will not change. The rates are set to increase from 3.4 percent to 6.8 percent July 1.
Earlier this week, Obama took a road trip to several college campuses to rally students on keeping rates low — a trip Republicans bashed as a politically-motivated stunt to capture the youth vote. On Friday, House Speaker John Boehner, R-Ohio, accused Obama of “trying to invent a fight” over expiring interest rates “when there isn’t one and never has been one.”
“I don’t think this is an invented fight,” Murray countered. “I think this is real. I’m delighted the president is taking it up, that he’s talking about it across the country, that we’re talking about it here today.”
The House bill passed Friday 215-195, with Washington’s delegation splitting the vote down party lines — Republicans in favor of the bill, Democrats against.
At UW, 12,000 undergraduates this school year took out a total of $50 million in subsidized federal loans, said Kay Lewis, director of financial aid for UW. An additional $37.5 million in unsubsidized Stafford loans — loans open to any student, regardless of the family’s income level — have been issued to 9,800 UW students this year; there is some overlap between the two programs.
Nationally, student-loan debt has reached $1 trillion, surpassing credit-card debt.
“The last thing students need right now — the very last thing — is for interest rates on this critical loan program to double this July,” Murray said.
Atenas Figueroa, a 17-year-old student from Bellevue who will be a freshman at UW this fall and spoke during Murray’s news conference, said she will take out $20,000 in subsidized loans.
“We’re all making our decisions as to where to go to college” right now, Figueroa said of her high-school classmates. The amount of money available is “a big factor” for students in deciding where they can afford to go, she said. Figueroa is planning to major in civil engineering.
With a subsidized Stafford loan, the federal government pays interest on the loan while students are in school. Keeping the interest rate at 3.4 percent for another year would cost an estimated $6 billion.
Both the House bill that passed and the bill Murray is supporting would keep the interest rate low for only one more year.
Material from The Associated Press is included in this story.
Katherine Long: 206-464-2219 or email@example.com. On Twitter @katherinelong.