WASHINGTON (AP) — The defeat of a student loan bill in the Senate on Wednesday clears the way for fresh negotiations to restore lower rates, but lawmakers are racing the clock before millions of students return to campus next month to find borrowing terms twice as high as when school let out.
Republicans and a few Democrats blocked a White House-backed proposal that would have restored 3.4 percent interest rates on subsidized Stafford loans for one more year. The failed stopgap measure was designed to give lawmakers time to take up comprehensive college affordability legislation and dodge 6.8 percent interest rates on new loans.
Without congressional action in the coming weeks, the increase could mean an extra $2,600 for an average student returning to campus this fall, according to Congress’ Joint Economic Committee.
“Let’s just extend this for one year. I don’t think that’s too much to ask,” said Democratic Sen. Tom Harkin of Iowa, chairman of the Senate Health, Education, Labor and Pensions Committee.
It proved too much for a bipartisan group of lawmakers, led by Sen. Joe Manchin, D-W.Va. They favored a compromise now and joined with Republicans in using a procedural roadblock to stop the one-year patch.
“This plan merely kicks the can down the road for 12 more months,” said Sen. Richard Burr, R-N.C., who worked with Manchin and Sen. Angus King, I-Maine, on a deal that linked interest rates to financial markets. “We’re going to vote on a 3.4 percent extension, kicking the can down the road and not finding a solution,”
The Senate vote was 51-49, nine votes short of the 60 votes needed to move forward.
The Republican-favored plan that Manchin helped to write was not considered for a vote in the Democratic-controlled Senate.
But that proposal was the subject of an evening session among leaders from both parties about next steps. That session in Democratic Sen. Dick Durbin’s office included liberal lawmakers, including Harkin, who previously refused to consider the Manchin-led proposal.
The talks could yield a compromise that could be announced as early as Thursday.
Without serious negotiations between the parties and without an agreement within a fractured Democratic caucus, students would face higher costs when they begin repaying their loans after graduation. Lawmakers pledged to return to negotiations to avert that, and aides were gauging what was possible given the narrow window before Congress breaks again for the August recess.
“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 that unless Congress tries again, students could be borrowing money for fall courses at a rate leaders in both parties called unacceptably high.
Officials said Wednesday’s vote would not be the final word on student loans and that it would nudge members from both parties back to the negotiating table. Even those who favored an extension said they were not inflexible.
Harkin, for instance, said he was not wedded to 3.4 percent interest rates forever and was open to a different approach, as long as profits from student lending weren’t used as a way to pay down the nation’s deficit.
A Harkin ally said compromise is possible if Republicans are willing to yield as well.