Senate Democrats Propose Pension Offset for Student Loans

Tim Goral's picture
Wednesday, June 13, 2012

Company pension contribution rules should be modified and pension insurance premiums increased to cover the cost of a one-year freeze in the 3.4 percent student loan interest rate, U.S. Senate Majority Leader Harry Reid proposed.

Reid urged raising the premiums companies pay to the Pension Benefit Guaranty Corp. and letting companies contribute less to retirement plans that provide a defined benefit level. The Nevada Democrat put the idea in a letter to House Speaker John Boehner and Senate Minority Leader Mitch McConnell, both Republicans.

“I suggest we use part of these offsets to pay for the student loan legislation and pass that measure immediately so that middle-class families will not see their interest rates double on July 1,” Reid said.

Unless Congress acts, interest rates on government subsidized student loans will double to 6.8 percent in July. Republicans and Democrats have been unable to agree on how to cover the $5.9 billion cost of the rate freeze.

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