Senate still trying, failing to adopt a student-loan fix

posted at 6:01 pm on July 10, 2013 by Erika Johnsen

In the wake of the Senate’s passage of the immigration bill the other week, they’ve been trying — and failing miserably — to fill their legislative agenda with an extension of last year’s stopgap that held the interest rate for federally subsidized student loans at 3.4 percent. That provision expired on July 1st, meaning that rates for new loans jumped up to 6.8 percent, and they’re hoping to do something about it before students need to lock up their loans before college begins toward the end of August. The House has already passed a solution that would (quelle horreur!) tie interest rates with financial markets more so than lawmakers’ discretion — a move that President more or less tacitly endorsed in his budget, but the White House is declining to explicitly support — and Democrats refuse to do so without requiring some kind of (completely arbitrary) price cap.

After an earlier measure failed to extend the 3.4 percent rate for two years, the Senate tried again on Wednesday morning with a one-year extension. Nothing doing.

Hoping to avert that outcome, the Senate teed up a test vote on a proposal to return rates to 3.4 percent for one year. Republicans, though, blasted it as a stopgap, “kicking the can” fix that did not address the broader issue.

The bill, which needed 60 votes to advance, failed as expected on a 51-49 vote. …

Senate Democrats are ignoring a bill that House Republicans already passed, while Republicans say the Senate bill is not the solution. …

But chamber leaders so far have refused to take up a measure that passed the House that would link interest rates to the financial markets.

That bill incorporated an idea that was included in President Obama’s budget. The White House, though, has not publicly put its weight behind the House proposal. …

“The president, as you know, is for a long-term fix here, but we are generally for a resolution of this problem because we have already passed the deadline whereby students face a doubling of their loan rates,” White House Press Secretary Jay Carney said. “Supporting a single bill is not the answer here. Supporting a compromise that can get the votes necessary that meets the president’s principles is our position.”

And this latest fizzle only came after much internal agonizing, via WaPo:

The failed key test vote came after contentious discussions Tuesday, much of it between Democrats who have been split on the issue. Senate Majority Leader Harry M. Reid (D-Nev.) met for hours with White House Chief of Staff Denis McDonough and Education Secretary Arne Duncan. At the weekly Democratic caucus luncheon, Sen. Elizabeth Warren (D-Mass.) harshly criticized Sen. Joe Manchin III (D-W.Va.) for sponsoring a bill with Republicans that would tie interest rates for all major federal education loans to market rates but would not impose a formal cap on how high those rates could go in future years.

After that lunch, Reid addressed reporters and stressed that lawmakers need to approve the rate extension instead of not taking action. Reid and other leaders have opposed allowing for an ever-changing interest rate without a stated cap to protect future generations of students from much higher rates. Just steps away, Manchin and two co-sponsors of the other bill hosted their own media event, saying that all students need interest rate relief and senators cannot continue to delay making a decision.

Again, this is all a lot of hoopla for one heck of a pitiful “solution” to the dilemmas facing young people. The real problem here is the tuition inflation that these loan-subsidization policies are directly creating, not to mention the stagnating economy and shrinking labor market into which students are currently graduating (it’s pretty tough to pay off your student loans these days when it’s now a boon to secure even part-time employment!). As the WSJ points out, however, Senate liberals don’t seem to care as much about the damaging effects of this type of legislation as they do throwing a bone to their constituents in the nonprofit academic world. Just business as usual:

As the Senate prepares for Wednesday voting on student-loan subsidies, a coalition that includes congressional Republicans, President Obama and moderate Democrats favors reform that ties the rates on student loans to the 10-year Treasury rate. This protects taxpayers from having to guarantee low fixed rates to students while the government’s own borrowing costs rise. …

But in recent years an historic surge in student-loan debt is changing education for many borrowers from a winning investment into a staggering burden. Such debt has nearly tripled since 2004 and now hovers around $1 trillion, with defaults rising on student loans and other types of debt held by these young borrowers. …

Liberals apologize for the price hikes imposed by their friends in the faculty lounge by pretending that universities are starved for revenue. Rep. Frank Pallone (D., N.J.) claimed on MSNBC on Saturday that “the federal government is not making the investment in higher education.” Perhaps he’s forgotten that annual Pell grant spending of $34 billion has roughly doubled in the Obama era, or that Uncle Sugar now originates more than $100 billion in annual loans. …

No one should be surprised that one of the chief sponsors of this anti-reform bill is Senator Elizabeth Warren (D., Mass.), not even a year removed from her membership on the Harvard faculty. During the August recess she can expect a warm welcome in Cambridge.


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Fauxchantas say students should no pay.

SouthernGent on July 10, 2013 at 6:09 PM

She is doing a visual in the pic on the amount of common sense displayed by libs.

arnold ziffel on July 10, 2013 at 6:13 PM

Screw you MA. How low can a state go in 230 years.

Spineless jellyfish that the rest of us have to support.

acyl72 on July 10, 2013 at 6:17 PM

But chamber leaders so far have refused to take up a measure that passed the House that would link interest rates to the financial markets.”

I’m really getting sick of the MSM blaming Republicans for gridlock. All the Senate has to do is take it up. They can disagree (it’s never been written that the Senate has to accept a House bill) and they can work out a compromise. Compromise has received a new meaning. Compromise is now when the Democrats propose something and Republicans sacrifice their principles and agree with them.

bflat879 on July 10, 2013 at 6:24 PM

“This is the size of libby’s brain. Er…wait, nm, it’s actually much smaller than that.”

22044 on July 10, 2013 at 6:25 PM

Arnold are you sure that she’s not showing us how much ‘Indian’ she is?

countrybumpkin on July 10, 2013 at 6:31 PM

“If the average IQ were equal to 3 feet, this would be my IQ.”

-Stands Like A Lefty

Bishop on July 10, 2013 at 6:32 PM

Reid and other leaders have opposed allowing for an ever-changing interest rate without a stated cap to protect future generations of students from much higher rates.

Well gosh, Harry, why would the prime rate ever go up? I thought we could borrow and print money forever without any ill effects whatsoever, which is why we don’t have to close the deficit or pay down the continuously-rolled-over national debt.

Fabozz on July 10, 2013 at 6:34 PM

Pow Wow Chow…

OmahaConservative on July 10, 2013 at 6:34 PM

Compromise has received a new meaning. Compromise is now when the Democrats propose something and Republicans sacrifice their principles and agree with them.

bflat879 on July 10, 2013 at 6:24 PM

I suppose it’s new given the US started in 1776 but it has been around since the 1960′s as the operative principle of the Dems and MSM.

chemman on July 10, 2013 at 6:34 PM

Who cares? The Democrats won! Get over it already…

… or get involved today!

Who fights for your freedoms when you are too busy to do so? No one!

DannoJyd on July 10, 2013 at 6:35 PM

You wanna fix it?

Get the dang government out of it.

LegendHasIt on July 10, 2013 at 6:35 PM

Serious question: does anyone even know who owns these loans anymore? Is it directly the government? Or have they outsourced the ownership?

WhatSlushfund on July 10, 2013 at 6:37 PM

Let them go to a bank and get a personal loan with 7.3% interest.

ButterflyDragon on July 10, 2013 at 6:48 PM

Why is the gubmint involved with this anyways? (Except to hand out goodies to their favorites.)

Stupid people + government money = bankruptcy for all.

PattyJ on July 10, 2013 at 7:07 PM

bflat879 on July 10, 2013 at 6:24 PM

Harry can’t do anything because the Rethuglicans in the Senate are saying mean things to him, and stuff.

Another Drew on July 10, 2013 at 7:12 PM

Got an idea. Force colleges to cut back tuition 10-15%. They raise it every year 3-4% regardless of economic conditions & no one says anything. Why is that?

RdLake on July 10, 2013 at 7:39 PM

Ignore the squaw.

Mason on July 10, 2013 at 8:04 PM

She is doing a visual in the pic on the amount of common sense displayed by libs.

arnold ziffel on July 10, 2013 at 6:13 PM

…I thought she was showing us…how big her peni$ was…when she’s excited!

KOOLAID2 on July 10, 2013 at 8:32 PM

Let’s see, by the time my two sons got out of college (over 9 years) the tuition had more than DOUBLED. And this is at a (Land Grant) State University for gawdsake.
DOUBLED, and the inflation rate? Nope, not even under King Putt has it doubled. But there are only 1300 days left in his administration. There are lots of mathematical functions that will describe the financial mayhem that we’ll suffer before January 2015.
As the man said, ‘Hell might not be so bad after all.’
Anyone have a graphical comparison of inflation plotted with college tuition costs? I saw this once and it was ASTOUNDING.
But I doubt the LIVerals would understand because it’s a GRAPH.

How is it that the good people of Massataxes are such poor evaluators of political leadership? Perhaps that’s what they do with the dumbasses they turn them into politicians. Of course at the federal level they foist this crap on the rest of us. Right, Bawney Fwranks? Are there any Kennedy’s still there? And this Warren twit is just over the top for credulity.

Missilengr on July 10, 2013 at 8:40 PM

Anyone have a graphical comparison of inflation plotted with college tuition costs? I saw this once and it was ASTOUNDING.
But I doubt the LIVerals would understand because it’s a GRAPH.
 
Missilengr on July 10, 2013 at 8:40 PM

 
Here’s a really fun one that includes medical costs, too:
 
http://blogs.chicagotribune.com/.a/6a00d83451b4ba69e2014e86eaff33970d-pi

rogerb on July 10, 2013 at 9:16 PM

That provision expired on July 1st, meaning that rates for new loans jumped up to 6.8 percent, and they’re hoping to do something about it before students need to lock up their loans before college begins toward the end of August.

A subsidized federal loan is when the government pays the loan’s interest while you’re in school while an unsubsidized government student loan requires you to pay all the interest, although you can have the payments deferred until after graduation. To receive a subsidized Stafford Loan, you must be able to demonstrate financial need. About 2/3 of subsidized Stafford Loans are awarded to students with family adjusted gross income (AGI) of under $50,000, 1/4 to students with family AGI of $50,000 to $100,000, and a little less than 10% to students with family AGI over $100,000.- Stafford Loans

Mrs. Warren, pictured here from MA, where the median income is $65K. My experience is that most students don’t get those loans or they get them in very limited amounts. Most of these loans go to students who qualify for Pell Grants. And Pell Grants are not merit based, which is their biggest flaw. The second biggest flaw, is that they let students have two years to find out they are not ready for college. I hope they amend this bill to make grades and scores count toward a Pell grants and a Stafford loan, and require proof of grades in first year in order to get these things for sophomore year. Parents who pay for their kids own way thru college do not let them return if they flunk out the first year. Just level the playing field.

Fleuries on July 10, 2013 at 9:27 PM

Got an idea. Force colleges to cut back tuition 10-15%. They raise it every year 3-4% regardless of economic conditions & no one says anything. Why is that?

RdLake on July 10, 2013 at 7:39 PM

It’s because of easy money…particularly government intervention in the free market for student loans. The government is pumping tuition money out to people who are high risk for not completing their education and paying back their loans….oh, yeah.

freedomfirst on July 11, 2013 at 12:06 AM