Senate Democrats object to passing Obama's student loan fix

She instead had originally proposed that the Senate consider and pass a bill from Sen. Jack Reed (D-R.I.), but Burr objected to that request.

ADVERTISEMENT
“We have a student loan program that produces $51 billion in profits off the backs of our students,” Warren said. “[The Republican] proposal would have increased profits by another $16 billion. … That is in my view completely unsustainable.”

If Congress doesn’t act by July, interest rates on some student loans will double from 3.4 percent to 6.8 percent.

“I’m sick of waiting until the deadline to do anything,” Burr said. “We’re going to wait until the last day and dare each other not to do it.”

Earlier this month, the Senate failed to get 60 votes needed to consider a bill introduced by Reed and Tom Harkin (D-Iowa). The Student Loan Affordability Act, S. 953, would freeze need-based student loan interest rates for two years while Congress works on a long-term solution. Warren said lawmakers need the extra time because Congress is not set to consider the reauthorization of the Higher Education Act, which would also address existing student loan debt and the rising cost of college tuition.

Reed and Harkin would pay for their bill by ending three tax breaks. Specifically, it would limit the use of tax-deferred retirement accounts, restrict “earnings stripping” by expatriated entities and close an oil and gas industry tax break by treating oil from tar sands the same as other petroleum products.

The House passed the Smarter Solutions for Students Act, which would set federal student loan rates equal to the rate on the 10-year Treasury note plus 2.5 percent. The rate would be variable and reset each year, although students could package all their loans into a fixed-rate loan after graduation. The GOP bill also caps the rate at 8.5 percent for most students.

Senate Republicans have a similar bill from Sen. Tom Coburn (R-Okla.), S. 1003, which would require that for each academic year all newly issued Stafford, Graduate PLUS, and Parent PLUS loans be set to the U.S. Treasury 10-year borrowing rate plus 3 percentage points, something similar to what Obama proposed in his 2014 budget.

Republicans have said they’d prefer a bill that is a permanent fix, rather than a two-year extension, but Democrats argue that the Republicans’ bill would be worse than doing nothing because student loan rates would be allowed to rise higher than 6.8 percent.