Senate Majority Leader Harry Reid, a Democrat, has asked the Republican leaders of both chambers of Congress to consider a plan to keep the Stafford loan interest rate low by reauthorizing the nation’s surface transportation programs and by increasing the premiums employers pay for pension insurance . The vote would need to take place immediately, Reid said, as the interest rate on new loans issued is set to double to 6.8% July 1.
In a letter to Republican leaders John Boehner, speaker of the House of Representatives, and Mitch McConnell, Senate minority leader, June 7, Reid referred back to a letter the two had sent President Barack Obama May 31 expressing a desire to find a common ground to extend the lower interest rate of 3.4% for another year.
In a strong bipartisan showing, the Senate passed legislation 74-22 that would reauthorize surface transportation programs, meaning companies would continue to be required to use a two-year corporate bond rate in calculating their pension liabilities. Reid said there has also been bipartisan support for increasing the premiums employers pay for insurance provided by the Pension Benefit Guaranty Corporation. Employers would pay more than their current rate of $35 per pension plan recipient; it is not yet clear how much more.
Together, those plans could fund the estimated $7 billion in lost revenue the higher interest rate would create. This plan is one of many suggested in a highly partisan debate in the House and Senate. So far, Senate Republicans and Senate Democrats have rejected legislation that would have kept the interest rates low.
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