Students’ loan rates stay on rise
Senate try fails to halt increase
WASHINGTON — Senate Republicans on Tuesday blocked consideration of a Democratic bill to prevent the doubling of some student-loan interest rates, leaving the legislation in limbo less than two months before rates on subsidized federal loans are set to shoot upward.
Along party lines, the Senate voted 52-45, failing to clear the 60-vote hurdle needed to beat back a filibuster and begin debating the measure. Sen. Olympia Snowe, the retiring moderate Republican from Maine, voted present.
Arkansas’ senators split on the vote, with Democrat Mark Pryor voting to advance the measure and Republican John Boozman in opposition.
Republicans said they wanted to extend Democratic legislation passed in 2007 that temporarily reduced interest rates for the low- or middleincome undergraduates who receive subsidized Stafford loans to 3.4 percent from 6.8 percent.
But they oppose the Senate Democrats’ proposal to pay for a one-year extension by changing tax law that allows some wealthy taxpayers to avoid paying Social Security and Medicare taxes by classifying their pay as dividends, not cash income.
“They want to raise taxes on people who are creating jobs when we are still recovering from the greatest recession since the Great Depression,” said Sen. Lamar Alexander, R-tenn., who instead wanted to pay for it by eliminating a preventive health-care fund in President Barack Obama’s health-care law.
Obama has been hammering Republicans for weeks on the issue, which has been elevated as a major political showdown, despite its relatively modest impact. Students took out twice the value of student loans in 2011, about $112 billion, as they did a decade before, after adjusting for inflation. Overall, Americans now owe about $1 trillion in student loans, and in 2010 such debt surpassed credit-card debt for the first time.
But the bill in limbo addresses only a portion of that burden. Graduate students with Stafford loans pay a higher rate, as do students with unsubsidized Stafford loans. Most undergraduates take out unsubsidized and subsidized loans.
Before the vote, Senate Democrats arrayed college students to plead for a “yes” vote, including Clarise McCants, 21, a junior at Howard University who said she had pulled herself out of a troubled neighborhood in North Philadelphia and relies on $13,500 in Stafford loans for her tuition.
“I know I’m not the only one with dreams,” she said. “I’m here to ask Congress, ‘Don’t double my rate.’”
Republicans have not al- ways been so averse to closing the provision the Senate bill addresses. In 2004, when it emerged that Democrat John Edwards had classified himself as a “subchapter S corporation” to pay himself dividends rather than income, conservatives blasted him for ducking payroll taxes.
But the Democratic line of attack has been complicated by the House’s actions. Shrugging off a White House veto threat, the House passed an extension of the subsidized rate last month, paid for with the preventive health-care fund. Thirteen Democrats voted for the bill, making up for the 30 Republicans who voted no because they opposed federal subsidies for an interest rate they believed should be set by market forces. Those Democratic votes put the House bill over the top and fortified Republican arguments that the Senate Democrats are now to blame for the stalemate.
Rep. Steny Hoyer of Maryland, the No. 2 House Democrat, said Tuesday that those Democratic votes were driven by politics, not substance.
“They didn’t want that 30second ad” attacking them for opposing a rate-subsidy extension, he said. “That was not a demonstration at all for the funding source.”
Republicans made clear they would go on the offense, blaming Democrats if interest rates doubled July 1.
“Instead of compounding the problem with more bad policies that raise taxes on small businesses and raid Social Security and Medicare, we must work together to prevent a rate increase on students and make it easier for job creators to hire them when they graduate,” Sen. Roy Blunt, R-MO., said after the vote.