On July 1, need-based student loan rates doubled from 3.4 percent to 6.8 percent. Senate Majority Leader Harry Reid (D-Nev.) said that the Senate could vote on a bipartisan deal that would lower rates now, but some Democrats have complained that rates could rise above 6.8 percent for future students.
A Democratic plan from Sen. Jack Reed (D-R.I.) failed last month that would have extended the 3.4 percent rate for one year.
The bipartisan deal would be a permanent solution and base loan rates on the 10-year Treasury note, plus 2.05 percent to cover administrative costs. The bill also caps undergraduate loan rates at 8.25 percent. The House passed a similar bill last month.
Warren and Reed have argued that the bipartisan bill maintains profit levels on student loans. They believe the government should offset loan spending by raising taxes on corporation of the wealthy.
“There is no compromise in this bill,” Warren said. “With student loan rates now at 6.8 percent the government will make $140 billion in profits. Under the new proposal the government will make the same $140 billion ... that all comes directly off the backs of students. I want to see these profits go down.”
Sen. Dick Durbin (D-Ill.), a co-sponsor of the bipartisan deal, defended the bill because he said there weren’t the votes in the House and Senate to pass a more progressive bill.
“We don’t have the votes to achieve it,” Durbin said. “So the question is will we do nothing?”
Reed said he would introduce an amendment to the bipartisan bill to change the loan cap from 8.25 percent to 6.8 percent.
Sen. Bernie Sanders (I-Vt.), who also doesn’t support the bipartisan plan, said he too would offer an amendment that would sunset the loan bill after two years. Congressional Budget Office estimates show that under the bipartisan bill, loan rates would remain below 6 percent for the first two years.