WASHINGTON (AP) — Senate Republicans on Wednesday blocked legislation aimed at letting people refinance their student loans at lower rates, a pre-ordained outcome that gave Democrats a fresh election-year talking point against the GOP.
The 56-38 vote fell short of the 60 that would have been needed to advance to debate on the measure by Sen. Elizabeth Warren, D-Mass. Her bill would have let millions of borrowers, some with years-old debt and interest rates topping 7 percent or more, refinance at today’s lower rates.
The bill would have been paid for with the so-called Buffett Rule, which sets minimum tax rates for people making over $1 million.
“With this vote we show the American people who we work for in the United States Senate: billionaires or students,” said Warren. “A vote on this legislation is a vote to give millions of young people a fair shot at building their future.”
Republicans said the bill wouldn’t have done anything to lower education costs or reduce borrowing, and they accused Democrats of playing politics by highlighting an issue that was bound to fail.
“The Senate Democrats’ bill isn’t really about students at all. It’s really all about Senate Democrats,” said Minority Leader Mitch McConnell, R-Ky. “They want an issue to campaign on to save their own hides this November.”
Student loan debt has topped $1 trillion and emerged as a drag on the economy and on middle-class families across the country, making it a ripe target for politicians ahead of midterm elections where Democrats risk losing their Senate majority. Wednesday’s vote followed two days where President Barack Obama highlighted the issue from the White House, announcing executive action to let more borrowers to cap their monthly payments at 10 percent of their income and answering questions about the issue on the social networking site Tumblr.
The Obama administration said Warren’s bill could have helped some 25 million borrowers save $2,000 each over the lifetime of their loans. It would have allowed people with older loans at higher interest rates refinance to rates below 4 percent offered today under a deal reached a year ago in Congress.
Three Republicans joined all Democrats in voting to proceed to debate on the bill: Susan Collins of Maine, Bob Corker of Tennessee and Lisa Murkowski of Alaska.
Some 40 million Americans have outstanding student loan debt totaling $1.2 trillion, making it the second-largest form of consumer debt, second only to mortgages, according to Warren’s office. People 60 and older account for some $43 billion of outstanding student loan debt.
Note: Alexander’s news release on his vote against the “political stunt” is below.
News release from Sen. Lamar Alexander’s office:
Washington, D.C., June 11 – U.S. Senator Lamar Alexander (R-Tenn.), the senior Republican on the Senate education committee, today voted against moving to the Senate Democrats’ “political stunt” on student loans, saying the Senate shouldn’t “waste time on it when veterans are standing in line waiting for us to take up a bipartisan proposal.”
“This ‘no’ vote means ‘no’ to a week-long political stunt, ‘no’ to debt and taxes, ‘yes’ to moving today to a bipartisan solution to the problem of veterans standing in line at clinics. ‘Yes’ to appropriation bills after that deal with cancer research and national defense and the other urgent needs of our country, also in a bipartisan way. ‘Yes’ to the way the Senate ought to run,” Alexander said. “And ‘no’ to the practice of pulling a bill out of your pocket, putting it on the floor and wasting a week with a political stunt while veterans are standing in line at a clinic waiting for us to act.”
Alexander added: “This is not a serious proposal. It’s not going to help people. College graduates don’t need a $1 a day subsidy to pay off their $27,000 loan, which is the average for a four-year degree. They need a job.”
On Friday, the Labor Department reported that 12.2 percent of American workers are still out of work, working part-time when they want full-time work, or have given up looking for a job.
Alexander, a former U.S. Secretary of Education and former President of the University of Tennessee, helped put together last year’s bipartisan agreement to reduce interest rates on new student loans. He led Republican opposition to the Senate Democrats’ proposal this week. In a floor speech yesterday, he explained that the bill “raises individual income taxes by $72 billion and could add up to $420 billion in new federal debt to offer a $1-a-day subsidy for some old student loans.”
In remarks before this morning’s Senate vote, Alexander urged his colleagues to vote against the “political stunt.”
“Why do I say this is not a serious proposal?” Alexander asked. “Everybody in the Senate knows that. They know it’s not going to pass. So why would we be wasting our time on it? Number one, it does nothing, not one thing, for current or future students. If you’re in college today or if you’re going tomorrow, this doesn’t do anything for you. So don’t let the rhetoric fool you.
“Number two, what does it do for people who used to be in college, who might have a loan they’re paying off? According to data supplied by the Congressional Research Service, this will give you $1 a day. This is for former students who have old loans—a taxpayer subsidy of $1 a day to help you pay off your student loan.
Undergraduates make up 85 percent of all student loans and their average loan debt is $21,600. For undergraduates with a four-year degree, the average loan debt is $27,000.
“Probably the best investment you’ll ever make. The College Board says if you have a four-year degree, your lifetime earnings will be $1 million more. That’s $27,000 when you have no credit rating and and it earns you $1 million. A pretty good deal, I think.”
Alexander this week outlined solutions to the real problem with student loans.
“Most of the real problem with student loans today is over-borrowing by some students, mostly by graduate students. According to Mark Kantrowitz, more than 90 percent of students who graduate with $100,000 or more in student loan debt are graduate students—and this group represents approximately 6 percent of all graduate students. This is less than 2 percent of all student borrowers.”
He offered “real solutions for such over-borrowing.” These include:
· Simplifying the student loan program so that more students are able to take advantage of the affordable repayment options that already exist in current law.
· Eliminating the Graduate PLUS program that provides virtually unlimited loans to graduate students regardless of their credit history
· Prohibiting part-time students from taking out the same amount of loans that full-time students can
· Giving colleges and universities the ability to require counseling and limit the amount students can take out in federal loans.
· There are also proposals to require colleges and universities to put some “skin in the game” to ensure that students can repay their loans.
Note: The Corker perspective, as reported by the Leaf Chronicle:
Corker said that while he would not have voted for the underlying bill, “I think we should at least allow debate on ways to address the rising price of education and help students weigh the cost of undertaking debt with the value of the investment they are making in their future.”