WASHINGTON — Student loan interest rates will go up on Monday, after the Senate recessed Thursday evening without reaching a compromise to avert the hikes.
After Senate Majority Leader Harry Reid rejected a bipartisan compromise agreement that he termed the “Republican” plan, in spite of support from Democratic Sen. Joe Manchin and Independent Sen. Angus King, Democrats released their own plan: a one-year extension of the current rates to give them time to craft a solution to the larger problem of student loan debt.
The Keep Student Loans Affordable Act of 2013 is sponsored by Sens. Jack Reed and Kay Hagan, and as of a press conference this afternoon had 34 Democratic co-sponsors. It keeps the rates of student loans, which are government subsidized, at 3.4 percent for the next year, ostensibly giving lawmakers time to craft a more longterm solution.
“It will give us the time and the incentive and, I hope, the inspiration to look at this whole issue of financial debt and student debt,” Reed said.
Rates will still go up on Monday, but when a bill is passed, lower rates can be applied retroactively.
The House has also passed a bill to reduce student loans rates, which Senate Democrats rejected.
Senators will hold a vote on a motion to proceed on the bill on July 10, the Wednesday after they return from a week long recess, Sen. Debbie Stabenow said at the press conference. But that vote will not be an easy lift, and Democrats know it.
“We know the Republicans will filibuster it; we need sixty votes,” she said, saying that they would try to get every Republican vote possible.
Republicans have little incentive to come on board: President Barack Obama put forward a similar plan to the bipartisan bill.
“I don’t want to talk too much about the president being for it because we might lose these guys,” King said at a press conference Thursday morning, gesturing at the Republican sponsors of the bill.
One Republican aide familiar with the negotiations said Democrats were trying to politicize the issue, rather than get anything done.
“Senate Democrats don’t want a deal,” the aide told The Daily Caller. “They think they’ll be able to blame Republicans for opposing their political fix, but with Senate and House Republicans and the president all in basic agreement on the fundamentals here, somehow Senate Democrats think they won’t be held responsible for their obstruction. If I were starting college in the fall and needed to get a loan, I’d be furious that Senators Reid and Harkin are getting in the way of this kind of rare Washington agreement.”
The sticking point for Democrats is caps on interest rates. The bipartisan bill would set the caps at 8.25 percent, and the House bill would set it at 8.5 percent, which Reid and other Democrats feel is too high.
Asked why, with the deadline approaching, the Senate still had not reached an agreement, members of the bipartisan group said that kind of a pace was simply the way Senate did things.
King likened it to a “dog that could walk on its hind legs.”
“The remarkable thing is not that it’s done well,” he said, “it’s that it’s done at all.”