The Senate failed to advance a bill today that would have kept the interest rate on Stafford federal student loans from doubling to 6.8% by this June. Republicans and Democrats now profess to support averting the change, but they differ on how to pay for the extension. Republicans want to take the money from the Affordable Care Act’s Prevention Fund, a trick they have pulled before. Democrats want to close a loophole that lets rich S-Corporation owners avoid taxes. Both sides oppose the other’s plan. But the House passed its version on a party-line vote with Republican support. Because of the supermajority needed to advance legislation in the Senate, they couldn’t do the same.
On a party-line vote, senators voted 52 to 45, short of the 60 votes necessary to proceed to debate on the bill. There is no clear path forward at the moment for lawmakers, who have until July 1 to reauthorize lower rates for roughly 7 million borrowers who could see rates on subsidized student loans jump from 3.4 to 6.8 percent.
Senate Democrats offered Republicans a vote on their pay-for, the cuts to the Prevention Fund, which would actually zero it out. But that offer wasn’t enough to get Republicans in the Senate to relent and pass the motion to proceed.
At an event today, Democratic Senator Jack Reed said his party would be open to “sensible proposals to pay for this.” But nobody has any idea what both Democrats and Republicans would find sensible, especially with the student loan interest rate becoming a political football in recent weeks. There’s no sense that negotiations have begun to find a pay-for that would get broad agreement.
The smart money in Washington all assumes that some accommodation will be reached. I’d like to see some more proof of that before agreeing.