Democratic Split Stalls Senate College Loan Bill
By JONATHAN WEISMAN
A bipartisan coalition blocked a Democratic proposal to retroactively cut interest rates on higher education loans.
WASHINGTON — A bipartisan Senate coalition on Wednesday blocked a
Democratic proposal to retroactively cut interest rates on higher
education loans in half, leaving any student loan rescue in doubt and
laying bare divisions among Democrats about how to resolve the dispute.
Related
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In Congress, Gridlock and Harsh Consequences (July 8, 2013)
The bill pushed by the Democratic leadership would have renewed a
subsidized 3.4 percent interest rate on Stafford loans, whose rates
doubled to 6.8 percent on July 1. But a bipartisan group of senators —
led by Joe Manchin III, Democrat of West Virginia; Angus King,
independent of Maine; and Richard M. Burr, Republican of North Carolina —
had forged what they saw as a compromise measure that would have tied
student loan rates to federal borrowing costs.
Democratic leaders refused to give the coalition a vote on its plan, and
Mr. Manchin and Mr. King voted with Republicans to filibuster the
Democratic plan, which received 52 votes, 8 short of the number needed
to break the delay. Senator Harry Reid of Nevada, the majority leader,
switched his vote to “no” for parliamentary reasons, leaving the final
tally 51 to 49.
The student loan issue was supposed to be a political bonanza for
Democrats, who were convinced that Republicans would cave on legislation
extending the subsidized rate. Instead, it has revealed the kinds of
divisions usually on display with Republicans — splitting rank-and-file
Democrats from an emerging centrist group that has become increasingly
willing to buck its leaders.
Democratic leaders dug in to protect the subsidized rate, even after
President Obama drafted a detailed plan to tie student loan rates to the
interest rates on 10-year Treasury bonds. House Republicans latched on
to the president’s plan and passed a measure in May that was similar
enough to the White House proposal to give Republicans solid political
cover against Democratic attacks.
Then Mr. Manchin, Mr. King and Senator Thomas R. Carper, Democrat of
Delaware, drafted a compromise that they thought would ease liberal
concerns over the House bill. The compromise measure would neither raise
money for the government nor cost it any money, and interest rates each
year would be fixed for the life of the loan. The House bill would
raise money for the Treasury and would allow rates to fluctuate with
Treasury rates.
“Many say this is a Republican bill,” Mr. Manchin said. “On this side, it’s not. It’s a bipartisan bill.”
More-liberal senators, led by Senator Tom Harkin, Democrat of Iowa, who
is the chairman of the Senate Health, Education, Labor and Pensions
Committee, said that as the economy improved and interest rates rose,
the proposal could lead to higher rates than if the fixed 6.8 percent
rate simply remained in force. They argued that a long-term resolution
of the issue should be drafted over the coming year in a broad rewriting
of federal higher education policy that is under negotiation.
Both sides said Wednesday that the failure of the Democratic bill would
lead to last-ditch negotiations that could still yield a deal. But time
for a breakthrough is slipping away for more than seven million students
who receive subsidized Stafford loans. Most new loans for the coming
school year will be issued at the beginning of August.
“The differences here are relatively small,” said Justin Draeger, the
president of the National Association of Student Financial Aid
Administrators. “This is what our country was designed to do, work out
our differences, right?”
Regardless, Democratic divisions in the Senate may well have handed
House Republican leaders a rare victory in the public opinion wars for
younger voters.
“Republicans acted to protect students from higher interest rates and
make college more affordable, yet Senate Democratic leaders let student
loan interest rates double without passing any legislation to address
the issue,” Speaker John A. Boehner said after the Senate vote. “It’s
long past time for President Obama to lead, address the divisions within
his own party, and bring everyone together to enact a permanent
solution for students and their families.” COPY http://www.nytimes.com
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