Democrat on Democrat: Warren spars with Manchin on student loan proposal

Liberal firebrand Sen. Elizabeth WarrenElizabeth Ann WarrenOn The Money — Sponsored by Prudential — Trump floats tariffs on European cars | Nikki Haley slams UN report on US poverty | Will tax law help GOP? It's a mystery Bill to protect work licenses of student loan debtors is welcome development Federal court rules consumer bureau structure unconstitutional MORE (Mass.) blasted a fellow Democratic senator Tuesday as a dispute over student loan rates escalated divisions within the party.

The clash, which is highly unusual among party colleagues in the upper chamber, came at a private caucus meeting about a subject that is helping Republicans land blows against their Democratic opponents.

“Elizabeth came out very strong against Manchin,” said a Democratic senator who requested anonymity to discuss the exchange. “She said, ‘They’re already making money off the backs of students, and this adds another $1 billion.’”

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Warren was referring to a deal Sen. Joe ManchinJoseph (Joe) ManchinThe Hill's Morning Report — Sponsored by PhRMA — Trump caves under immense pressure — what now? Election Countdown: Family separation policy may haunt GOP in November | Why Republican candidates are bracing for surprises | House Dems rake in record May haul | 'Dumpster fire' ad goes viral Manchin up 9 points over GOP challenger in W.Va. Senate race MORE (D-W.Va.) and two other members of the caucus, Sens. Tom CarperThomas (Tom) Richard CarperOvernight Energy: Inhofe defends Pruitt after criticisms | Agency releases study on water contaminant | Trump rescinds Obama ocean policy Dems press EPA nominees on ethics, climate Overnight Energy: Senate panel sets Pruitt hearing | Colorado joins California with tougher emissions rules | Court sides with Trump on coal leasing program MORE (D-Del.) and Angus KingAngus Stanley KingMaine Senate candidate arrested outside immigration detention center Icebreaking ships are not America’s top priority in the Arctic Heckler yells ‘Mr. President, f--- you’ as Trump arrives at Capitol MORE (I-Maine), struck with Republicans to peg student-lending rates to the 10-year Treasury notes. 

Sen. Tom HarkinThomas (Tom) Richard HarkinDem Senator open to bid from the left in 2020 Senate GOP rejects Trump’s call to go big on gun legislation Trump should require federal contractors to follow the law MORE (D-Iowa), the chairman of the Health, Education, Labor and Pensions Committee, stood up to announce to colleagues that a fact card passed out by Manchin summarizing his proposal contained two mistakes.

Harkin disputed Manchin’s claim that, under the bipartisan proposal, the interest rates for new Stafford loans would be 3.66 percent. Harkin said that claim failed to reflect that under the Manchin proposal, the rates on undergraduate Stafford loans would hit 7.1 percent by 2019.

Under the law that expired on July 1, the rate for subsidized Stafford loans was 3.4 percent. It has jumped to 6.8 percent and will remain at that level until Congress acts.

Harkin also hit Manchin for claiming the bipartisan plan places a cap on interest rates.

The bipartisan proposal in the Senate would cap student loan rates at 8.25 percent, but only for consolidated loans, not individual ones.

Manchin and his allies, Carper and King, pushed back against the pressure. They took the rare step of holding a competing press conference with reporters in the Ohio Clock corridor while Senate Majority Leader Harry ReidHarry Mason ReidAmendments fuel resentments within Senate GOP Donald Trump is delivering on his promises and voters are noticing Danny Tarkanian wins Nevada GOP congressional primary MORE (D-Nev.) touted a separate Democratic proposal to reporters. That plan, sponsored by Sen. Jack ReedJohn (Jack) Francis ReedOvernight Defense: States pull National Guard troops over family separation policy | Senators question pick for Afghan commander | US leaves UN Human Rights Council Senators question Afghanistan commander nominee on turning around 17-year war Reed: ‘Preposterous’ for Trump to say North Korea is no longer a nuclear threat MORE (D-R.I.), would freeze the rate for subsidized Stafford loans at 3.4 percent for another year.

The bipartisan plan endorsed by Manchin and the others would set interest rates for undergraduate Stafford loans at the 10-year Treasury rate plus 1.85 percent. It would set the rates for unsubsidized graduate Stafford loans at the 10-year Treasury rate plus 3.4 percent.

It would reduce the deficit by $1 billion over 10 years, which Warren and other liberals have characterized as balancing the budget on the backs of students.

The rival messages appeared to exasperate Sen. Charles SchumerCharles (Chuck) Ellis SchumerDonald Trump Jr. headlines Montana Republican convention Montana's environmental lobby teams with governor to kill 600 jobs Dems allow separation of parents, children to continue, just to score political points MORE (N.Y.), the Senate Democratic messaging chief, who engaged in an animated conversation with Manchin, Carper and King before they met with reporters.

Reid tersely described Tuesday’s caucus meeting as “lively.”

While Manchin, Carper and King stood only a few yards down the ornate corridor outside the Senate chamber, Reid drew a line, declaring he would only back a plan that guarantees student loan rates will remain below the current 6.8-percent rate.

“I’ve told my caucus, I’ve told individual senators, if you can explain to me why doing something is better than doing nothing, then we’ll do it,” he said. “All the proposals, within two years, at the outside three years, make the rate more than 6.8 percent.”

Backers of tying the loan rates to Treasury bonds point out that it would result in lower rates now, but Reid said that interest rates are just now beginning to rise from all-time lows, with nowhere to go but up.

“We have the lowest interest rates we’ve had in the history of this country,” he said. “Interest rates are going to go up, and who’s going to suffer from that? Students.”

 After speaking to reporters, Reid planned to meet with Education Secretary Arne DuncanArne Starkey DuncanWe could save some lives with reforms that gun owners would support Obama Education secretary: Boycotting schools would 'shock the nation' into changing gun laws Biden says 'enough is enough' after Santa Fe school shooting MORE and White House chief of staff Denis McDonoughDenis Richard McDonoughLive coverage: Justice IG testifies before House on report criticizing FBI Ex-Obama chief of staff: Obama's Russia response was 'watered down' Former Obama officials launch advocacy group aimed at Trump's foreign policy MORE to further discuss the matter.

Manchin and Carper said they hoped their proposal would receive a vote on the Senate floor, but Harkin said that would not happen Wednesday.

“Why should there be a side-by-side?” he said.

Harkin said Manchin could offer his plan as an amendment if the Senate votes to proceed on the Democratic alternative freezing the rate for subsidized Stafford loans at 3.4 percent for one year.  

The Senate will vote Wednesday to end debate on the motion to proceed to that measure.

Proponents of a one-year freeze of the lower, 3.4 percent rate argued ahead of the floor vote that Congress should tackle the rate as part of comprehensive reforms to higher education, coming as part of the reauthorization of the Higher Education Act.

“It will give us time to look at student lending in a comprehensive way,” said Reed.

There were indications Tuesday that Democrats were looking for some sort of compromise, and some may be enticed to join the market-based approach pushed by Manchin and others. Sen. Claire McCaskillClaire Conner McCaskillThe American economy is stronger than ever six months after tax cuts The Hill's Morning Report — Sponsored by PhRMA — Immigration drama grips Washington Conservative group calls for ethics probe into McCaskill’s use of private plane MORE (D-Mo.), said she could back student loan interest rates based on market movements as long as there are sufficient caps on the rates.

“We might find a sweet spot if we could do a little bit of market, a little bit of caps, and see if we can’t put together a bipartisan group on that,” she said.

And Sen. Bob CaseyRobert (Bob) Patrick CaseyAction by Congress is needed to help victims of domestic violence Poll: Casey holds double-digit lead over Barletta in Pa. Senate race Ivanka Trump to press Senate on vocational training bill MORE Jr. (D-Pa.), who is a co-sponsor on Reed’s one-year freeze bill, said he was very interested in finding a longer-term solution.

“I’m willing to listen to anything,” he said. “I think it’s vital we start trying to move forward on a longer-term plan.”

Despite the efforts of Manchin and King, it was clear that some liberal lawmakers would not be swayed.

Sen. Bernie SandersBernard (Bernie) SandersSen. Sanders: 'Hypocrite' Trump rants against undocumented immigrants, but hires them at his properties On The Money — Sponsored by Prudential — Trump floats tariffs on European cars | Nikki Haley slams UN report on US poverty | Will tax law help GOP? It's a mystery Nikki Haley: 'Ridiculous' for UN to analyze poverty in America MORE (I-Vt.), a strong proponent of freezing the lower rates, called the bipartisan bill “totally insane.”

“The American people would laugh at that. It’s not a proposal,” he told The Hill, adding that the administration’s push for a market-based student loan rate is also a nonstarter.

“We should make sure working families in this nation can afford college,” he said. “The White House’s proposal is absurd as well.”

Meanwhile, Senate Republicans looked to keep up pressure on Democrats, again highlighting that the White House has also called for student loan rates tied to Treasury bonds.

Sen. Lamar AlexanderAndrew (Lamar) Lamar AlexanderOn The Money — Sponsored by Prudential — Supreme Court allows states to collect sales taxes from online retailers | Judge finds consumer bureau structure unconstitutional | Banks clear Fed stress tests Supreme Court rules states can require online sellers to collect sales tax 13 GOP senators ask administration to pause separation of immigrant families MORE (R-Tenn.), who is a co-sponsor of the compromise bill, said a one-year freeze would leave students “twisting in the wind,” and make student loans a regular political football like the so-called “doc fix.”

— Published at 4:56 p.m. and updated at 8:23 p.m.