Ohio delegation debates student loan fix

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Ohio delegation debates student loan fix

Dayton Daily News – Congress could take action in the next few weeks to prevent the college student loan interest rate from doubling this summer for nearly 382,000 Ohioans, including more than 32,000 in Montgomery County.

Congressional Democrats and Republicans have proposed competing bills to extend the 3.4 percent interest rate on federally subsidized Stafford Loans, used by 7.8 million low- and moderate-income students . Without a vote, interest on new loans taken out after July 1 will double to 6.8 percent.

The two bills differ on how to pay the estimated $6 billion price tag to freeze the lower rate — either the Democrats’ plan to cut from tax benefits or the Republicans’ plan to cut from President Barack Obama’s health care law.

U.S. Sen. Sherrod Brown, D-Ohio, said allowing the interest rate to double would be “a step backward and then some.”

“It would be a one-two punch in the gut,” Brown said Thursday.

The higher interest would add $2,800 to the bill of an average borrower and $5,000 for the neediest students during 10-year repayment, according to the U.S. Public Interest Research Group.

A bill introduced Tuesday and co-sponsored by Brown would extend the lower rate for one year. The Student Loan Interest Rate Hike Act of 2012 would finance the lower rate by “closing a tax loophole” for people making $200,000 individually or $250,000 jointly through an S Corporation — typically small-sized businesses — to pay payroll taxes from which they are now exempted, Brown said.

“This is not taxing the job creators,” he said. “This is a tax for lawyers and lobbyist.”

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