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Back to Negotiation After Student Loan Vote Fails

July 11, 2013
The Intelligencer / Wheeling News-Register

WASHINGTON (AP) - The defeat of a student loan bill in the Senate on Wednesday clears the way for fresh negotiations to restore lower rates, but lawmakers are racing the clock before millions of students return to campus next month to find borrowing terms twice as high as when school let out.

Republicans and a few Democrats - including Sen. Joe Manchin of West Virginia - blocked a White House-backed proposal that would have restored 3.4 percent interest rates on subsidized Stafford loans for one more year. The failed stopgap measure was designed to give lawmakers time to take up comprehensive college affordability legislation and dodge 6.8 percent interest rates on new loans.

Without congressional action in the coming weeks, the increase could mean an extra $2,600 for an average student returning to campus this fall, according to Congress' Joint Economic Committee.

Article Photos

AP Photo
Prospective students tour Georgetown University’s campus Wednesday in Washington, D.C.

"Let's just extend this for one year. I don't think that's too much to ask," said Democrat Sen. Tom Harkin of Iowa, chairman of the Senate Health, Education, Labor and Pensions Committee.

It proved too much for a bipartisan group of lawmakers led by Manchin. They favored a compromise now and joined with Republicans in using a procedural roadblock to stop the one-year patch.

"This plan merely kicks the can down the road for 12 more months," said Sen. Richard Burr, R-N.C., who worked with Manchin and Sen. Angus King, I-Maine, on a deal that linked interest rates to financial markets. "We're going to vote on a 3.4 percent extension, kicking the can down the road and not finding a solution,"

Fact Box

HOW THEY VOTED

W.VA.

Manchin

Against

Rockefeller

For

OHIO

Brown

For

Portman

Against

The Senate vote was 51-49, nine votes short of the 60 votes needed to move forward.

The Republican-favored plan that Manchin helped to write was not considered for a vote in the Democrat-controlled Senate.

Without serious negotiations between the parties and without an agreement within a fractured Democrat caucus, students would face higher costs when they begin repaying their loans after graduation. Lawmakers pledged to return to negotiations to avert that, and aides were gauging what was possible given the narrow window before Congress breaks again for the August recess.

"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 that unless Congress tries again, students could be borrowing money for fall courses at a rate leaders in both parties called unacceptably high.

Officials said Wednesday's vote would not be the final word on student loans and that it would nudge members from both parties back to the negotiating table. Even those who favored an extension said they were not inflexible.

Harkin, for instance, said he was not wedded to 3.4 percent interest rates forever and was open to a different approach, as long as profits from student lending weren't used as a way to pay down the nation's deficit.

A Harkin ally said compromise is possible if Republicans are willing to yield 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 said the vote would not inevitably 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 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, 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," said Kline, R-Minn.

The rate increase does not affect many students right away. Loan documents generally are signed just before students return to campus, and few students returned to school over the July Fourth holiday. Existing loans were not affected, either.

 
 

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