|Page (1) of 1 - 05/24/12||email article||print page|
Senate rejects GOP, Dem plans to freeze student loan interest rates, fight will resume in June
WASHINGTON (AP) ' The Senate rejected dueling Democratic and Republican plans on Thursday for averting a July 1 doubling of interest rates on federal college loans for 7.4 million students, pushing back efforts to resolve the election-season showdown until next month.
In mostly party-line roll calls, senators voted 62-34 against the GOP package and 51-43 for the Democratic version, with each falling short of the 60 votes needed for approval. Though both defeats were preordained, the twin votes gave lawmakers from each party a chance to show they favor easing students' financial burdens ' and potential grist for campaign ads accusing the other side of opposing the effort.
The Senate planned to leave town later Thursday for a Memorial Day recess running through next week. Neither party wants to be accused of letting the interest rates grow at a time when voters are focused on coping in today's rough-edged economy, giving each side an incentive to eventually strike a compromise.
A 2007 law gradually reduced interest rates on subsidized Stafford loans for low- and middle-income students to 3.4 percent. To save money, it mandated that rates return to 6.8 percent for new loans as of July 1.
President Barack Obama has made preventing a rate increase a priority and has appeared at colleges and on television talk shows to promote it. Though some Republicans expressed early concerns that retaining the lower rate would fuel college tuition increases, likely GOP presidential candidate Mitt Romney endorsed freezing the rate and most GOP lawmakers have done the same.
Both measures rejected Thursday would delay the interest rate increase for a year at a cost of $6 billion, but each side's bill was paid for in a way the other couldn't tolerate. Democrats proposed raising Social Security and Medicare payroll taxes on high-earning owners of some privately held companies and professional practices, while Republicans would abolish an Obama preventive health program.
That idea drew a White House veto threat when Republicans used it to pay for their House-passed bill in April.
"The Republican proposal is paid for by stripping Americans of lifesaving preventive health care," said Senate Majority Leader Harry Reid of Nevada, adding, "It would be a shame" to do that.
Senate Minority Leader Mitch McConnell of Kentucky argued that the Democratic plan showed they wanted "a scapegoat more than a solution" because they knew Republicans would oppose its tax provision.
He also tried goading Obama, saying, "If the president's got time to run around to late-night comedy shows and college campuses talking about this issue, then he can pick up the phone and work out a solution."
The Education Department expects 7.4 million undergraduates to borrow subsidized Stafford loans next year averaging $4,226. Doubled interest rates would add around $1,000 in costs, which for the typical loan taking 12 years to repay would mean less than $10 monthly in added expense.
The Federal Reserve Bank of New York estimates that at least 37 million Americans owe $870 billion for outstanding student loans, a figure that is growing and that exceeds the money owed for credit cards or auto loans. Four in 10 people under age 40 owe money for a college loan, the bank says.