Senate blocks rival bills, but compromise possible on student loan interest rates | St. Louis Public Radio

Senate blocks rival bills, but compromise possible on student loan interest rates

Jun 7, 2013

This article first appeared in the St. Louis Beacon: WASHINGTON – In a bit of political theater, the Senate deadlocked over rival bills Thursday on student loan interest rates -- setting the stage for backroom talks to prevent a doubling of the rate for new student loans on July 1.

After the dueling Republican and Democratic bills fell short of filibuster-proof majorities, the two sides traded charges – but senators said privately that they expected a compromise could be worked out before the deadline. If not, the interest rate on new subsidized student loans would rise to 6.8 percent from the current 3.4 percent.

“There's more work that needs to be done here, and it needs to be done pretty quickly,” said U.S. Sen. Roy Blunt, R-Mo., who backed the GOP bill. “It's amazing to me that we let these things drag out to the last minute, only to prove that we've got more work to do.”

For his part, U.S. Sen. Dick Durbin, D-Ill. – a cosponsor of the Democratic alternative – bashed Republicans after the votes. He accused them of being unwilling to close tax loopholes as a way of securing low interest rates on subsidized student loans.

“What they [Republicans] have basically said is: We don’t want to run the risk of closing tax loopholes on the wealthiest people in America to pay for this, so we’ll let the working families and the students bear the burden,” argued Durbin.

“The Democratic position is: Let’s keep the cost of these student loans reasonable, within the grasp of working families.”

Blunt and other Republicans dismiss such arguments, saying that the GOP plan would set a more predictable path for rates and would cover more types of student loans. They contended that the Democratic bill offered a relatively short-term solution on loan rates that would, in effect, raise some taxes by ending loopholes.

The Democratic bill, sponsored by U.S. Sen. Jack Reed, D-R.I., would freeze for two years the current 3.4 percent rate for subsidized loans to students in financial need. It won a slim majority, 51-46, but failed to get the 60 votes needed to stop debate.

Blunt and U.S. Sen. Mark Kirk, R-Ill., voted against the Democratic bill, and Durbin voted yes. U.S. Sen. Claire McCaskill, D-Mo., did not vote but was a cosponsor of the Reed bill. A spokesman said she missed the vote because of a longstanding commitment and got assurances from Democratic leadership that her vote was not crucial.

McCaskill “will continue working with her colleagues to find a solution that keeps student loans – and the economic opportunities they make possible – available for Missouri’s kids and grandkids,” the spokesman said. 

The Senate GOP bill was rejected, 40-57. Blunt and Kirk voted yes, Durbin voted no, and McCaskill did not vote. The bill, sponsored by U.S. Sens. Tom Coburn, R-Ok., Lamar Alexander, R-Tenn., and others, would have pegged student loan rates to the yield on the federal government’s 10-year U.S. Treasury bill, plus 3 percentage points.

Endorsing the Senate GOP bill earlier this week, Blunt told reporters that it “provides more certainty for students and it also covers a lot more loans.”

Alexander asserted that the Democratic bill would only fix lower rates for about 40 percent of student loans. He said the GOP plan “lowers rates for 100 percent of the loans to something less than 5 percent and is a permanent solution to the student loan issue.”

Meanwhile, the White House has taken a somewhat different stance than either of the defeated Senate proposals. Last week, President Barack Obama threatened to veto a House-passed student loan bill because he said it did not lock the rates of loans at the time they were acquired. 

U.S. Rep. Ann Wagner, R-Ballwin, and other House Republicans rejected that argument and accused the Democratic-led Senate of failing to act on the issue in a timely manner.

"I think the Congress can come to a compromise, and I hope we will,” Blunt told reporters, expressing frustration at Thursday’s predictable votes in the Senate.

“I am frustrated with the effort to prove that we can't come to a compromise, so that we can then get to work,” Blunt said, predicting that a solution may be within reach.

“The House is pretty close to something that works,” he said, even though he preferred the Senate GOP approach. “But we need some workable solution here, and I'm going to be part of trying to find that solution.”