U.S. Rep. Blaine Luetkemeyer (MO-9) today voted in favor of H.R. 4628, the Interest Rate Reduction Act, to extend current interest rates on student loans for one year. This bill will prevent interest rates from increasing on July 1, 2012, from 3.4 percent to 6.8 percent on new federally subsidized Stafford Loans to undergraduate students. In 2007, Congress enacted a law that would double student loan interest rates starting in 2012.

“In a struggling economy, it is important that we take action to ensure that college students are not hit with higher rates,” Luetkemeyer said. “This bill pays for extending the low interest rate by eliminating a slush fund created in the president’s health-care law, a law that is making it harder for small businesses to hire new workers and recent college graduates.  We need to give financial security for today’s students without raising taxes on their potential employers, which is what the Senate version of this bill would do.”

According to a recent AP report, at least half of recent graduates are unemployed or underemployed.  The cost of the one year extension of the lower rate is $5.985 billion. H.R. 4628 will repeal the “Prevention and Public Health Fund,”a slush find in the president’s health-care law. The nonpartisan Congressional Budget Office has estimated that preventing the interest rate increase would cost nearly $6 billion, while repealing the slush fund would save $12 billion – with over $6 billion in savings going to deficit reduction.

The slush fund, administered by the Secretary of Health and Human Services, who has full discretion on how to spend funds without further Congressional action or oversight, has a broad mandate for prevention, wellness and public health activities, which can go toward a variety of programs, including jungle gyms, bike paths and even lobbying activities, a clear violation of HHS rules governing the use of federal funds for lobbying and political education.  President Obama already has signed bipartisan legislation that takes money from this slush fund, and his budget for the coming fiscal year also calls for cutting it.  Last spring, the House passed H.R. 1217 with bipartisan support to repeal the fund altogether.