Much like the temporary Bush tax cuts had/have a cost to extend, so would this, in comparison to current law.

Early in the last Congress, Democrats passed and President Obama signed PAYGO legislation requiring all new non-emergency spending be offset.

NT

So we give big banks loans at zero percent thru the Fed and, in return, they charge us 6.8% for student loans? Sounds like a real bargain.

100% of these loans are originated by the federal government.

banks can continue to offer private, non-guaranteed student loans, of course, but these are usually not competitive with the governmental programs.

And why raise the interest rate??

i actually think these loans appear to be money-MAKERS under federal accounting rules. if they borrow at 1% or whatever, then lend at 3%, they make a profit.

in any reasonable accounting, you would take default risk into account, and 3% would then become the obviously subsidized rate that it is. but afaik, the government doesn't actually do that.

the raise in interest rates is automatic in that the cut to 3% or so was temporary. they would have to take action to keep it at the current low rate.

why not keep it low? mostly because republicans can't stand the government spending money to help people, even if that help eventually becomes a boon for businesses.

It actually has nothing to do with the interest rate. By demanding an "offset", the Republicans are just looking for another way to defund some government program (EPA, food stamps, etc) which they haven't yet been able to get through votes. Just remember, they are devious and duplicitous and will use ANYTHING and I mean anything, to crush any program of value.

Therefore, extending the temporary rate is considered a "cost" in the same way cutting a pre-planned "increase" to a government program can be claimed by some to be a "cut" to the program.

Could it not be argued that raising the interest rate on these student loans is like a "tax increase" on all these students?