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Unions bash proposal to offset student loan rate with higher fed retirement contributions

Republican House and Senate leaders have sent the president a letter containing a proposal to offset the reduced interest rate of federally subsidized student loans for one year with a permanent increase in federal employee retirement contributions.


Republican House and Senate leaders have sent the president a letter containing a proposal to offset the reduced interest rate of federally subsidized student loans for one year with a permanent increase in federal employee retirement contributions. The proposal — one of two options offered in the letter — drew a sharp response from federal union leaders, who urged President Obama to reject the proposal.

“Not only is federal retirement entirely unrelated to student loan interest rates, requiring federal employees to pay more for their retirement benefit is nothing more than an unjustified income tax increase on one small segment of the population, the working and middle class Americans who make up the federal government’s workforce,” American Federation of Government Employees National President John Gage wrote in a May 31 letter to the president.

The interest rate offset proposed by the Republican leadership would come from amounts generated by a measure in the administration’s fiscal 2013 budget proposal that would hike federal employee retirement contributions by an additional 1.2 percent of salary. That increase would be phased in by 0.4 percent in each of three calendar years through 2015.

The lawmakers' letter noted that the House has passed a bill that contains a measure calling for a significantly larger hike in additional employee contributions — 5 percent of salary more than current rates — phased in over five years.

National Treasury Employees Union President Colleen Kelley also sent a missive to the White House in response to the proposal.

“While we have not always agreed with your budget proposals, you have consistently pushed for balanced proposals that require burdens to be broadly shared,” Kelley wrote. “On the other hand, the House and Senate Republican leadership has sought to single out the federal workforce as virtually the only source of acceptable spending cuts and revenue increases.”

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