Senate Republicans derailed a Democratic bill on Tuesday aimed at keeping interest rates on federal college loans from doubling July 1 in an election-year battle aimed at the hearts — and votes — of millions of students and their parents.
Republicans said they favor preventing the interest rate increase but blocked the Senate from debating the $6 billion measure because they oppose how Democrats would pay for it: Boosting Social Security and Medicare payroll taxes on high-earning stockholders of some privately owned corporations.
GOP senators want a vote on their own version heading off the interest rate increases and paid for by eliminating a preventive health fund created by President Barack Obama's 2010 healthcare overhaul. That financing idea has no chance of passing the Democratic-run Senate and has drawn a veto threat from the White House.
Tuesday's vote was 52-45 in favor of starting debate on the Democratic legislation — eight votes shy of the 60 needed. Senate Majority Leader Harry Reid, D-Nev., was the only one to defect from his party's position, a procedural move that will allow him to hold the vote again should the two sides work out a deal.
The vote was largely symbolic because the Democratic bill had no chance of approval by the GOP-led House.
The measure would have extended today's 3.4 percent interest rate on subsidized Stafford loans for another year. Under a 2007 law, those rates will grow to 6.8 percent without congressional action, thanks to a 2007 law that gradually lowered those rates but expires on July 1.
Both parties know they will need a bipartisan pact on financing the measure. They are both motivated to strike such an agreement because in the months before this November's presidential and congressional elections, neither wants to be blamed for letting college costs grow for students and their families struggling in today's weak economy.
But before they strike a compromise — which both parties believe will happen before July 1 — both sides were eager to use the debate to score partisan points.
Senate Minority Leader Mitch McConnell, R-Ky., said Democrats were forcing that vote as "a way to drive a wedge between Republicans and a constituency that they're looking to court ahead of November's elections. That's what today's vote is all about for them."
McConnell said the Senate "has ceased to be a place where problems are resolved. It's become, instead, a place where Democrats produce campaign material."
Reid said he might be willing to allow a vote on the GOP bill. But he also criticized Republicans for opposing the Democratic plan.
"They're sending a clear message that they'd rather protect wealthy tax dodgers, and that's what they are, than help promising students achieve their dreams of higher education," Reid said.
Both leaders acknowledged that a bipartisan agreement on how to finance the legislation was needed for the effort to advance, but each dared the other to propose such a plan.
"If they want some other way to pay for it, let's take a look at that," Reid said.
McConnell said Democrats should support the GOP proposal "or at the very least offer a bipartisan solution of their own."
Subsidized Stafford loans are for low- and middle-income students. The higher rates, should they occur, would only affect students taking out new loans starting July 1.
Democrats who controlled Congress in 2007 and wrote the student loan law allowed the lower interest rates to rise again this summer because they felt it would have been too expensive to permanently reduce those rates.
The Education Department estimates 7.4 million students will borrow $31.6 billion in such loans in the year beginning July 1, averaging $4,226 for each student.
These loans generally are paid off over a decade or more after graduation. Allowing interest rates to double would cost the typical student about $1,000 over the life of the loan, the administration says.
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