Congressional Republican leaders Thursday offered new ways to pay for freezing student loan rates, due to double July 1.
Chances are Democrats won't buy the approaches,
In that case, the leaders said in a letter to President Barack Obama, they're ready. "We believe our alternative is reasonable and responsible, but in the interest of finding common ground on a way to pay for a one year extension of the current student loan interest rate we are open to other solutions that we have all supported in the past," wrote House Speaker John Boehner, R-Ohio, Senate Minority Leader Mitch McConnell, R-Ky., and others.
Their ideas:
Option 1:
Student Loan Interest Rate: Extend for one year (July 1, 2012 to June 30, 2013) the 3.40 percent interest rate for new subsidized Stafford student loans. (CBO estimates this proposal will increase the deficit by $5.985 billion over the 2012 to 2017 period and $5.985 billion over the 2012 to 2022 period.)
Increase Federal Employee Retirement Contributions: As part of the Fiscal Year 2013 Budget, the Administration proposes to increase current employee contributions to the Civil Service Retirement System (CSRS) and the Federal Employee Retirement System (FERS) by 0.4% in each of the next three calendar years—2013, 2014, and 2015—for a cumulative increase of 1.2% of pay over current contributions. The House of Representatives has passed a substantially larger increase in contributions (5% over current law levels phased-in over five years for regular CSRS and FERS employees) as part of the Sequester Replacement Reconciliation Act. (CBO estimates that the Administration’s proposal would reduce the deficit by $8 billion over the 2012 to 2017 period and $18 billion over the 2012 to 2022 period. Note: This estimate reflects that contribution levels have already been increased for new hires as part of the Middle Class Tax Relief and Job Creation Act, Public Law 112-96.)
Option 2:
Student Loan Interest Rate: Extend for one year (July 1, 2012 to June 30, 2013) the 3.40 percent interest rate for new subsidized Stafford student loans. (CBO estimates this proposal will increase the deficit by $5.985 billion over the 2012 to 2017 period and $5.985 billion over the 2012 to 2022 period.)
Limit Length of In-School Interest Subsidy: As part of the Fiscal Year 2013 Budget, the Administration proposes to limit the duration of borrowers’ in-school interest subsidy for subsidized Stafford loans to 150 percent of the normal time required to complete their educational programs. According to the Department of Education, “The Budget request eliminates the in-school interest subsidy for borrowers who do not complete their program within 150 percent of their program length. Beyond that point, these borrowers no longer receive the interest subsidy for the Subsidized Stafford loans they have taken out, and interest will immediately begin to accrue on these loans. As with the 12 semester Pell limitation enacted this fall, students who attend school half-time would have their benefits adjusted accordingly.” (CBO estimates that the Administration’s proposal would reduce the deficit by $475 million over the 2012 to 2017 period and $1.055 billion over the 2012 to 2022 period.)
Revise Medicaid Provider Tax Threshold: Under current law, states may not tax health care providers and return the tax revenues to those same providers through higher Medicaid payment rates or through other offsets and guarantees (known as a “hold harmless” arrangement). An exception to this provision is that the federal government will not deem a hold harmless arrangement to exist if the provider taxes collected from given providers are less than 6 percent of the providers’ revenues. As part of the Fiscal Year 2013 Budget, the Administration proposes to phase down the Medicaid provider tax threshold to 3.5% from Fiscal Year 2015 to Fiscal Year 2017. The House-passed Sequester Replacement Reconciliation Act would lower the allowable percentage threshold to 5.5 percent starting in 2013. (CBO estimates that the House-passed proposal would reduce the deficit by $4.65 billion over the 2012 to 2017 period and $11.3 billion over the 2012 to 2022 period.)
Improve Collection of Pension Information from States and Localities: Both the Administration’s Budget Proposal for Fiscal Year 2013 and the House-passed Middle Class Tax Relief and Job Creation Act (December 2011) include a proposal to prevent Social Security overpayments by improving coordination with States and local governments. By requiring State and local government pension payers to identify whether a worker’s pension is based on government employment, the Social Security Administration (SSA) can improve enforcement of two benefit offset provisions affecting certain government workers. (CBO estimates that the Administration’s proposal would reduce the deficit by $358 million over the 2012 to 2017 period and $2 billion over the 2012 to 2022 period.)