Key facts
- Two House Republicans are attempting to force a vote on legislation to cap federal student loan interest rates at 2%.
- Democrats are largely resisting the bill, citing Republican policies that they claim have worsened student debt affordability.
- Democrats have introduced their own competing proposals, including one to refinance loans to 0% interest.
- The Republican-led bill faces challenges from both Democrats and some conservatives due to its cost and potential beneficiaries.
- The fight over student loan debt policy is unfolding as Democrats aim to leverage affordability issues heading into the midterms.
A legislative effort in the House of Representatives to cap federal student loan interest rates is facing unexpected resistance from Democrats, despite being led by Republicans. Rep. Anna Paulina Luna (R-Fla.) is attempting to use a discharge petition, which requires 218 signatures, to force a vote on her bill that would cap interest rates at 2%. However, she has only secured the support of one Democrat, Rep. Jared Moskowitz (D-Fla.), with other Democrats expressing reluctance to aid Republicans in fixing an issue they believe the GOP exacerbated.
Democrats argue that Republican policies, including a measure passed last year that eliminated a $0-payment program for some borrowers, have worsened student loan affordability. They contend that supporting the Republican bill would be politically disadvantageous and prefer to advance their own legislative solutions. Rep. Joe Courtney (D-Conn.) stated that his competing bill, co-sponsored with Sen. Peter Welch (D-Vt.), is more fiscally responsible and aims to refinance all federal student loans to 0% interest, funded by a trust fund.
The American Enterprise Institute estimates Luna's proposal could cost at least $30 billion annually. Preston Cooper, a fellow at AEI, noted that while capping interest might appeal to some Republicans as it's not outright forgiveness, its cost and potential to disproportionately benefit high-earning professionals are concerns. He suggested that addressing the Pell Grant shortfall should be a higher priority.
Advocates like Mike Pierce of Protect Borrowers, who initially supported the bipartisan effort, have seen their support wane. He argues that recent policy changes have significantly increased costs for borrowers and that a change in congressional power after the midterms might better position progressives to push for broader debt relief. Meanwhile, other Democrats, such as Rep. Bobby Scott (D-Va.), have introduced their own proposals, including one that would tie interest rates to the 10-year Treasury note with a cap of 5%.