Student loan bill fails in Senate
The first official Senate attempt to roll back student loan rates failed Wednesday, pushing the Democratic leadership to now consider an alternative bipartisan plan they have thus far tried to stamp out.
Rates doubled from 3.4 percent to 6.8 percent at the beginning of the month; the vote was on a bill to cut them to the original figure for another year. It failed to get close to the 60 votes needed, 51-49.
Senate Democrats have been divided on what to do. Majority Leader Harry Reid and Sen. Tom Harkin - chairman of the Health, Education, Labor, and Pensions Committee - have pushed the one-year plan. Others have been working with Republicans on a long-term solution.
Senators from both parties are working behind the scenes on something that can pass the chamber. Majority Whip Dick Durbin (D-Ill.) hosted the sponsors of the alternative bill in his office to see if a "workable compromise can be reached," one source said. The White House and education department was aware of the meeting, and released a statement Wednesday backing the one-year extension supported by Democrats.
Members of the Democratic leadership have painted the alternative bill as a shortsighted solution that would do more damage than good in the long run. Democrats have also been quick to brand the bill as a "Republican" solution, which has frustrated the bill's sponsors.
"When they say it is the Republican bill, that's so erroneous. This is truly a bipartisan effort," Sen. Joe Manchin (D-W.Va.) said on the Senate floor Wednesday.
Those backing the alternative bill are eager to distance the plan from one proposed in the Republican-controlled House last month, hoping to make the bill more enticing to Democrats in the Senate. In their pitch to the Senate, they have emphasized two major differences to the House bill: the Senate bill assures the federal government makes no profits off of the student loan program; and keeps loan rates fixed the life of the loan. Moreover, they hold that the market based approach the bill has adopted-tying interest rates to treasury bonds-closely follows the recommendations from the White House.
Democrats, however, have put effort into blocking the bill because they believe the bill will only keep rates low for the first two or three years, based on a CBO projection of treasury bonds.
"It's a classic bait and switch," Harkin said.
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