WASHINGTON A proposal from Democrats to retroactively lower interest rates on federally subsidized student loans failed a test vote in the Senate on Wednesday.
A White House-backed bill that would have kept rates at 3.4% for one year drew 51 votes, short of the 60 needed to clear a procedural hurdle. Rates on subsidized loans doubled to 6.8% on July 1, but congressional Republicans and Democrats still have not agreed on a plan for lower rates. For students returning to campus in the fall, the spike could mean an average $2,600 increase in their payments.
For credit unions the rates are important because they are viewed as a benchmark for private student loans originated by credit unions and banks.
The Senate set a test vote on a proposal to return rates to 3.4% 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.
“This plan merely kicks the can down the road for 12 more months,” said Sen. Richard Burr, R-N.C. “We are going to vote on a 3.4% extension, kicking the can down the road and not finding a solution.”
The Senate so far has refused to take up a bill that passed in the House because it does not cut the rates back as much.
Most Democratic senators favor keeping the rates at 3.4% for now and including a broad overhaul of federal student loans in the Higher Education Act rewrite lawmakers expect to take up this fall.
“Students should not suffer while we attempt compromise,” Senate Majority Leader Harry Reid said. “This extension will allow us to craft a long-term solution to mounting college debt without harming students in the short term.”
