Neither the GOP nor Democratic bill is likely to win the 60 votes necessary to clear the Senate, and the failure of both can be expected to lead to finger-pointing over which party is to blame. But the agreement should allow the Senate to complete work on a separate bill reauthorizing the Food and Drug Administration.
Both parties agree that the loan rates should be extended, but they differ over how to pay for the $5.8 billion cost. Republicans would raid a fund set up by Obama’s healthcare law, while Democrats want to kill a business tax break, which would pay for the loan rate extension after 10 years.
The student loan legislation has become a political hot potato since President Obama, looking to appeal to younger voters in an election year, went on a tour of college campuses last month and criticized Republicans in Congress for not extending the current 3.4 percent interest rate on Stafford loans, which expires on July 1.
Republicans in the House quickly moved legislation to extend the low interest rates on student loans, but paid for the $5.8 billion cost by closing a preventative care fund set up by Obama’s healthcare law. The administration has threatened to veto that legislation.
Under the deal announced on the Senate floor by Senate Majority Leader Harry Reid (D-Nev.), GOP legislation similar to the House bill would receive a Senate vote, but so would a Democratic bill extending the low-interest loans and paying for them by ending the tax break. Republicans oppose that measure because of the tax provision, and Democrats broadly oppose raiding the health fund.
Reid announced the agreement as part of a deal that also limits amendments to the FDA bill, making it likely that legislation will be approved Thursday before the Senate leaves town for the Memorial Day holiday. The Senate will consider 17 amendments to the FDA bill.