In a letter to President Obama, House Republicans have suggested increasing federal employee retirement contributions as one of two possible options to fund an extended 3.40% interest rate for student loans for one year.
The increase would come as part of the FY 2013 budget and would raise current employee contributions on CSRS and FERS employees by 0.4% in each of the next calendar years (2013, 2014, and 2015) for a cumulative increase of 1.2% of pay over current contribution rates.
The House has previously passed a much larger increase in contributions (5% phased in over five years) as part of the Sequester Replacement Reconciliation Act.
The letter was written by House Speaker John Boehner, Senate Republican Leader Mitch McConnell, House Majority Leader Eric Cantor, and Senate Republican Whip Jon Kyl.
In the letter, the House GOP members said the reason for their proposal was two-fold: first, they noted that the House had passed a bill last month to extend the student loan interest rate by repealing the Prevention and Public Health Fund that was created as part of the Patient Protection and Affordable Care Act, but also pointed out that the President has indicated he would veto this legislation.
Additionally, the letter stated that the Senate’s proposal to extend student loans would fund the extension by taxing small businesses which the letter’s authors said is an unacceptable solution for the House.
Since neither of the two aforementioned solutions was one that would satisfy everybody, the authors were suggesting the two new proposed solutions put forth in the letter.
In addition to the increase in federal workers’ pension contributions, a second solution was proposed which would limit length of the in-school interest subsidy, revise the Medicaid provide tax threshold, and improve collection of pension information from states and localities.
You can read the full letter and details of each proposal on the House Speaker’s web site.