Once again, Congress has failed our students. Today, the bill to roll back student loan interest rates to 3.4 percent proposed by Sen. Jack Reed (D-R.I.) failed to get cloture, meaning it will not be able to move forward for full floor consideration and an up-or-down vote. Thus student loan rates will stay at 6.8 percent, where they have been since July 1, until Congress manages to pass a solution.
The vote for cloture was 51-49, will 60 votes needed for the bill to more forward. (The 49 includes Majority Leader Harry Reid, who frequently votes against cloture only for procedural reasons.) No Republicans voted for it, and Sens. Joe Manchin (D-W.Va.) and Angus King (I-Maine), voted against it as well since they are championing a bipartisan alternative bill. These 48 members are therefore in today’s Hall of Shame.
Now we are left with just a few extremely unattractive options for students:
1. The Smarter Solutions for Students Act: A bill passed in the House on party lines in May, it ties the student loan interest rates to the 10-year Treasury note with a cap on rates at 8.5 percent. Under this bill in the short term rates will be lower than the current 6.8 percent, but in the long term they could rise up to 8.5 percent, increasing costs on our already financially burdened students.
2. The Bipartisan Student Loan Certainty Act: Proposed by Sens. Manchin, King, Lamar Alexander (R-Tenn.), Richard Burr (R-N.C.) and Thomas Carper (D-Del.), this bill would tie interest rates to the 10-year Treasury note as well, but without any cap on interest rates. Students can consolidate multiple loans at a rate of 8.25 percent, but there is no cap on individual loan rates. Rates might be lower for the first few years under this proposal, but as the economy improves they could soar with no limit and significantly harm students in the long run.
3. A possible new compromise that Reid stated lawmakers are working on that he hopes will be formed by the end of the month.
Democratic and Republican senators alike agreed today that we need a long-term solution for students, but they differed on what that solution would look like. Sens. Manchin and Burr championed their bipartisan bill as the solution, but as made clear by Sen. Tom Harkin (D-Iowa) in floor debate, “In the first couple of years [under this bill] there would be an interest rate lower than 6.8 percent, but according to the CBO by 2016 it would be way above 6.8 percent, almost at 8.6 percent.”
In addition, Manchin and Burr argued that their plan contains the cap on interest rates that Senate Democrats have been asking for, since students are able to consolidate their loans at 8.25 percent. But there is no cap on individual loan rates, and as Sen. Harkin pointed out, “Consolidation happens once. And students who consolidate can end up paying extremely higher amounts in the long run.”
The bipartisan “solution” therefore does lack the cap that is so crucial to keeping rates low for students.
It is clear that Republicans and those Democrats that voted against this bill to freeze rates do not care what happens to our students – not in the short run or the long run. The only long-term “solutions” they have proposed will raise rates for our students, and they voted against the only proposal that will keep rates low. So what exactly do they want? To pay down the deficit using the profits made off of student loans.
Students recognize that this isn’t a fair deal to them. Student groups have argued against the House proposal and the new bipartisan deal in the Senate. Students are telling Congress what they want, yet Congress still cannot deliver.
So what’s next? Time to put real pressure on Congress to fix this problem. Enough is enough. Time’s up, and 7 million students will soon be returning to school and signing loans with a 6.8 percent interest rate. Hopefully Congress can accomplish what so many students have been asking them to do all along: #DontDoubleMyRate