By Peter Schroeder - 05/14/14 12:02 PM EDT
Senate Democrats are preparing a June offensive on student loans meant to bolster the party's 2014 election message.
Democrats will push for a vote on legislation to allow people to refinance student loan debt at a lower rate.
The effort is part of of a broader messaging battle meant to portray Republicans as out of touch with the middle class. It goes part and parcel with the Democratic push to raise the minimum wage.
It also comes as Democrats seek ways to bolster turnout among their core supporters for the midterm elections, when an older and whiter electorate generally shows up to vote.
The new bill would allow borrowers to refinance their existing loans at at the rate of 3.86 percent. That's the current rate for new loans under legislation Congress passed last year.
The bill would cover the costs of those refinancings by enacting the “Buffett Rule,” a Democratic policy prescription that would ensure the wealthy pay some minimum amount of tax.
The push to increase taxes on the wealthy has long been a non-starter with Republicans, but Sen. Charles Schumer (D-N.Y.) said Democrats were willing to deal on the offset.
“We’re open. We welcome suggestions on how they would pay for it,” he said.
Schumer, the Senate’s No. 3 Democrat, said the plan was to bring the bill to the floor for a vote in early June.
Democrats say they expect Republicans to eventually sign on to the bill, arguing it gives existing borrowers the chance to refinance at the same rate Congress agreed to give new borrowers when it last enacted student loan legislation.
“The numbers in this bill are exactly the same numbers that almost every Republican in the House and the Senate ... voted for last summer,” said Warren.
In fact, it was liberal Democrats like Warren that balked at the earlier student loan deal. They argued it set rates too high and tied the interest rate to movement in financial markets.
Lawmakers still do not know how much the refinancing plan would actually cost, but they say they will adjust the terms of the Buffett Rule to fully cover the expenses of letting people refinance down to lower rates.
They also argued that letting borrowers refinance at lower rates would be good for the overall economy. For example, freeing up funds that would have gone to pay higher interest could enable younger people to save money to buy a house or a car.
A study from the New York Fed released Tuesday found that 25-year-olds have an average of $21,000 in student loan debt. And young Americans with student loan debt are taking on mortgages at the lowest rate in a decade, and lag behind their peers who do not have college loans.
Schumer said student loan debt, which has grown in recent years to more than $1 trillion and is now the largest type of consumer debt, is “one of the major reasons our housing market is down in the dumps.”
“The whole economy has been weighted down by the huge debt burden on 40 million Americans aged 22 to 42 or so,” he said.