borrowing

Senate fails to roll back student loan rates

The Associated PressJuly 10, 2013 

— Senate Democrats on Wednesday failed to restore lower interest rates on student loans, again coming up short and perhaps signaling that undergraduates might really face rates twice as high as the ones they enjoyed last year.

The White House-backed proposal from Democratic leaders would have left interest rates on subsidized Stafford loans at 3.4 percent for another year while lawmakers took up a comprehensive overhaul. The one-year stopgap measure failed to overcome a procedural hurdle as Republicans – and a handful of Democrats – urged colleagues to consider a plan now that would link interest rates to the financial markets and reduce Congress’ role in setting students’ borrowing rates.

Democrats failed to muster the 60 votes needed to advance the measure. The vote was 51-49, with no Republicans voting to move forward.

Without serious negotiations between the parties – and within a fractured Democratic caucus – students would face higher costs to repay their loans after graduation.

“Today our nation’s students once again wait in vain for relief,” said Sen. Tom Udall, D-N.M. “They expected more of us and I share their disappointment.”

“Today, we failed. And our nation’s students pay the cost of that failure,” he added after the vote.

The failure to win a one-year approval – combined with little interest in such a deal in the Republican-led House – meant students would be borrowing money for fall courses at a rate leaders in both parties called unacceptable.

Immediately, lawmakers faulted the other party for the results.

“Today’s vote is just another example of how out of touch Republicans in Congress are with the struggles of everyday American families,” said Sen. Patty Murray, D-Wash.

Rep. John Kline, the Republican chairman of the House Education and the Workforce Committee, similarly blamed Democrats.

“Right now, millions of students trying to prepare for college and apply for financial aid are facing higher interest rates – all because a cadre of Senate Democrats is completely unwilling to compromise,” Kline said.

The rate increase does not affect many students right away; loan documents are generally signed just before students return to campus, and few students returned to school over the July Fourth holiday. Existing loans were not affected, either.

However, absent congressional action in the coming weeks, the increase could spell an extra $2,600 for an average student returning to campus this fall, according to Congress’ Joint Economic Committee.

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