Reid compares student loans to quicksand

Senate Majority Leader Harry Reid (D-Nev.) called on Republicans to join Democrats to allow college graduates to refinance their student loans.

“I was disappointed to hear that the Republican Leader doesn’t support this legislation. … He called it a fake fight,” Reid said on the Senate floor Tuesday. “There is nothing fake about helping families pay off student loan debt.”

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On Wednesday, the Senate is expected to take the first procedural vote on Sen. Elizabeth Warren’s (D-Mass.) S. 2432, the Bank of Students Emergency Loan Refinancing Act, which would allow the nearly 40 million people with more than $1.2 trillion in student loans to refinance to today’s lower interest rates of less than 4 percent. She paid for the bill with the “Buffet Rule” — a minimum 30 percent income tax payment from incomes between $1-2 million.

Reid likened the bill to a hero in a western movie that saves a victim from quicksand.

“Millions of Americans are caught in financial quicksand,” Reid said. “This bill is a lifeline.”

It is unlikely that enough Republicans will join Democrats to advance the bill, which is paid for by raising taxes on millionaires. Senate Health, Education, Labor and Pensions Committee ranking member Lamar Alexander (R-Tenn.) called the bill a “partisan political stunt” that includes a “class warfare tax.”

The Congressional Budget Office (CBO) determined that allowing former students to refinance their loans would cost $51 billions, but the tax increase on the wealthy would fetch $72.5 billion in revenue for the federal government, meaning a net gain of $20 billion.

Democrats argue that allowing borrowers to refinance student loans to a lower rate, the way people currently can with car loans and mortgages, would give the middle class a “fair shot” and free up funds that could be put to better use elsewhere in the economy.