Senate Comes Short in Preventing Some Student Loan Rates from Doubling
The Senate on Wednesday failed to pass a bill that would have repealed a recent increase on some new student loans. Opposition from Republicans and a few Democrats stalled the effort, raising the likelihood subsidized Stafford loans taken out this year will be double the interest rate that was on the books the previous year.
The bill to keep rates at last year’s rate—3.4 percent—needed 60 votes to pass the Senate and avoid a procedural filibuster, missing the mark 51-49. Still, the proposed legislation would have to win approval from the House, which earlier in the year passed its own loan fix that analysts say greatly resembled an overhaul put forth by the White House.
Here’s what the press is writing:
Associated Press: “The proposal from Democratic leaders would have left 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 few Democrats — urged colleagues to consider a plan now that would link interest rates to the financial markets and reduce Congress’ role in setting students’ borrowing rates.”
The Huffington Post: “On July 1, the rates on some new loans, for about 7 million students, doubled from 3.4 percent to 6.8 percent upon the expiration of a 2007 law that had gradually lowered the rates. Republicans, Democrats and the White House trotted out their own social media hashtags to encourage students to convince lawmakers not to “double my rates,” but the advocacy yielded no substantive action.”
Bloomberg News: “Senate Democrats failed in an attempt last month to advance legislation, S. 953, to extend the loan rate for two years. Republicans blocked that measure as well, arguing that Congress should adopt a House-passed proposal to peg student-loan interest rates to the 10-year Treasury note.
“The House plan, H.R. 1911, would charge students 2.5 percent more than the Treasury yield and cap rates at 8.5 percent.
“President Barack Obama also proposed tying loan rates to 10-year Treasury note yields.”
Washington Post: “The failed key test vote came after contentious discussions Tuesday, much of it between Democrats who have been split on the issue. Senate Majority Leader Harry M. Reid (D-Nev.) met for hours with White House Chief of Staff Denis McDonough and Education Secretary Arne Duncan. At the weekly Democratic caucus luncheon, Sen. Elizabeth Warren (D-Mass.) harshly criticized Sen. Joe Manchin III (D-W.Va.) for sponsoring a bill with Republicans that would tie interest rates for all major federal education loans to market rates but would not impose a formal cap on how high those rates could go in future years.”
Los Angeles Times: “The House plan, which passed that chamber in May, would involve slightly higher surcharges but would set an overall cap of 8.5% to protect student borrowers against significant rate increases. Under the president’s plan, rates would be locked in for the life of a loan, while under the House plan they would reset each year.”
USA Today: “The White House has taken a less aggressive role in this legislative dispute compared with the same battle last summer during President Obama’s re-election race, when he campaigned on the issue and Congress extended the 3.4% rate for an additional year.”
CBS: “Senate Majority Leader Harry Reid, D-Nev., said Wednesday that a number of senators from both parties met that morning to try to hash out a compromise.
If the rate isn’t fixed, it will impact the seven million people who will take out a loan this year. According to CBS News analyst Mellody Hobson, a higher rate could have a noticeable impact on the economy. Debt takes a toll in various ways; for instance, someone with student loan debt is 36 percent less likely to own a home.”
Wall Street Journal: “There has been little sense of urgency to resolve the standoff in the Senate, where lawmakers have been focused on passing legislation to overhaul the country’s immigration laws.
“But two meetings in the past 12 hours aimed at a compromise indicate some momentum even though neither produced an agreement. On Tuesday night, Democratic leaders met with President Barack Obama’s chief of staff, Denis McDonough, and Education Secretary Arne Duncan, signaling that the White House is engaged on the matter.”
The Christian Science Monitor explains the two bills put forth by Democrats that helped lead to internal squabbling.
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