Why Are Student Loan Interest Rates Set To Double? Thank These Lobbyists Who Helped Kill The Bill Yesterday
On Tuesday afternoon, Senate Republicans blocked a measure that would have prevented a big hike for student loan interest rates. The legislation would have kept “subsidized Stafford loans at 3.4 percent for an additional year, rather than doubling automatically for new loans starting July 1.”
While the vote yesterday was certainly a partisan battle, a closer look at the interest groups driving the roll call vote explains the greater powers at play. Democrats wanted to pay for the student loan support by closing a tax loophole that even the late Robert Novak and the Wall Street Journal lamented as one the most egregious problems in the tax code. Essentially, wealthy individuals and large corporations often file using ‘subchapter S’ companies to dodge paying employment taxes. With Republicans refusing to close this loophole, student loan interest rates are set to double.
Republicans blocked the student loan interest rate bill simply because big businesses and campaign contributors lobbied aggressively against closing the loophole. The National Journal published a letter from a number of Beltway lobbying groups — among them, the U.S. Chamber of Commerce, which represents many multinational corporations, and the American Banking Association — protesting the measure. These lobbying groups have wide sway over both parties, but particularly the GOP. For a full list of the corporate lobbying groups that are ensuring that students pay more for college, see below: