Senate fails to keep student loan rates low
WASHINGTON (AP) — A Democratic-led effort to keep interest rates on student loans low failed Wednesday to move forward in the Senate, setting the stage for fresh negotiations to help undergraduates avoid rates that are twice last year's...
WASHINGTON (AP) — A Democratic-led effort to keep interest rates on student loans low failed Wednesday to move forward in the Senate, setting the stage for fresh negotiations to help undergraduates avoid rates that are twice last year’s.
The White House-backed proposal from Democratic leaders would have kept interest rates on subsidized Stafford loans at 3.4 percent for another year while lawmakers took up a comprehensive overhaul. The one-year stopgap measure failed to overcome a procedural hurdle as Republicans — and a handful of Democrats — urged colleagues to consider a plan that would link interest rates to the financial markets and reduce Congress’ role in setting students’ borrowing rates.
The Senate vote was 51-49, nine votes short of the 60 votes needed to move forward. The Republican-favored plan was not considered for a vote in the Democratic-led chamber.
Without serious negotiations between the parties — and within a fractured Democratic caucus — students would face higher costs to repay their loans after graduation. Lawmakers pledged to return to negotiations to avert that.
“Today our nation’s students once again wait in vain for relief,” said Sen. Tom Udall, D-N.M. “They expected more of us and I share their disappointment.”
“Today, we failed. And our nation’s students pay the cost of that failure,” he added after the vote.
The failure to win a one-year approval — combined with little interest in such a deal in the Republican-led House — meant students could be borrowing money for fall courses at a rate leaders in both parties called unacceptably high unless Congress tries again.
Officials said Wednesday’s vote would not be the final word on student loans and said the failure would nudge members from both parties back to the negotiating table. Even those who favored an extension said they were not inflexible if Republicans were willing to compromise as well.
“I will continue to work hard to reverse this senseless rate hike,” said Sen. Jack Reed, D-R.I., who helped push extension measures. “Ultimately, we’ll need a bipartisan solution, but first Congress will have to do its homework. Republicans will have to come to the table and agree to address the bigger picture of college affordability in a meaningful and comprehensive way.”
The administration, too, said the vote would not consign students to higher rates.
“I wish we would have got this done before July 1 but I remain very optimistic that we’re going to get to a better place for students,” Education Secretary Arne Duncan said.
“We’re going to get it done sooner than later,” he told reporters at a department event about summer reading.
Interest rates on student loans doubled to 6.8 percent on July 1 because Congress didn’t act. After Wednesday’s vote, the political sparring continued.
“Today’s vote is just another example of how out of touch Republicans in Congress are with the struggles of everyday American families,” said Sen. Patty Murray, D-Wash.
Rep. John Kline, the Republican chairman of the House Education and the Workforce Committee, similarly blamed Democrats.
“Right now, millions of students trying to prepare for college and apply for financial aid are facing higher interest rates — all because a cadre of Senate Democrats is completely unwilling to compromise,” Kline said.
The rate increase does not affect many students right away; loan documents are generally signed just before students return to campus, and few students returned to school over the July Fourth holiday. Existing loans were not affected, either.
However, absent congressional action in the coming weeks, the increase could spell an extra $2,600 for an average student returning to campus this fall, according to Congress’ Joint Economic Committee.
During last year’s presidential campaign, lawmakers from both parties voted to keep interest rates on subsidized Stafford loans at 3.4 percent. Yet this year, without a presidential election looming, the issue seemed to fizzle and the July 1 deadline passed without action.
The White House and most Democratic senators favored keeping the rates at 3.4 percent for now and including a broad overhaul of federal student loans in the Higher Education Act rewrite lawmakers expect to take up this fall.
The Republican-led House has already passed legislation that links interest rates to financial markets. Republicans in the House were opposed to a one-year extension, however, meaning Wednesday’s Senate vote might not have fared well with them.
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Associated Press reporter Shaquille Brewster contributed to this report.
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Copyright 2013 The Associated Press.
