In The News

By now I am sure you have seen Senator Stabenow's efforts to barnstorm across the state and blame everyone under the sun (namely Republicans) for the failure of her student loan plan that even a Washington Post editorial has referred to as a "pathetic non-solution." 

A quick trip down memory lane reminds us that the last time the student loan debate transpired, a one year extension was granted with the promise that a long-term solution would be addressed prior to July 1, 2013. On May 23rd, the House passed a market-based approach similar to what President Obama asked for regarding student loans. To date, no plan has been passed by the Senate and as a result, student loan rates now stand at 6.8%.

Today, the New York Times highlights the reality of the situation. Senator Stabenow along with Leader Reid and other Democrats in the Senate have blocked another bipartisan market-based approach to student loans from receiving a vote on the floor. Additionally, the Senate has willfully chosen to not bring the House bill to the floor for a vote, which they could have done before the deadline passed.

The state of play is this. While Senator Stabenow says she wants "compromise" she has stood in the way of a market-based approach that the President, House Republicans, and a bipartisan group of Senators support.

It's time to take politics out of the student loans equation and stop having rates decided by the whims of congress. A market-based approach ends this game of political football in which students, families and Michigan are on the losing end. I call on Senator Stabenow to work with Senators Manchin and Burr to forge a market-based solution that can pass the Senate.

Rift Among Democrats Stalls Effort to Reverse Rise in College Loan Rates

The New York Times - Jonathan Weisman - July 10, 2013

WASHINGTON — A bipartisan Senate coalition on Wednesday blocked a Democratic proposal to retroactively cut interest rates on higher education loans in half, leaving any student loan rescue in doubt and laying bare divisions among Democrats about how to resolve the dispute.

The bill pushed by the Democratic leadership would have renewed a subsidized 3.4 percent interest rate on Stafford loans, whose rates doubled to 6.8 percent on July 1. But a bipartisan group of senators — led by Joe Manchin III, Democrat of West Virginia; Angus King, independent of Maine; and Richard M. Burr, Republican of North Carolina — had forged what they saw as a compromise measure that would have tied student loan rates to federal borrowing costs.

Democratic leaders refused to give the coalition a vote on its plan, and Mr. Manchin and Mr. King voted with Republicans to filibuster the Democratic plan, which received 52 votes, 8 short of the number needed to break the delay. Senator Harry Reid of Nevada, the majority leader, switched his vote to “no” for parliamentary reasons, leaving the final tally 51 to 49.

The student loan issue was supposed to be a political bonanza for Democrats, who were convinced that Republicans would yield on legislation extending the subsidized rate. Instead, it has revealed the kinds of divisions usually on display with Republicans — splitting rank-and-file Democrats from an emerging centrist group that has become increasingly willing to buck its leaders.

Democratic leaders dug in to protect the subsidized rate, even after President Obama drafted a plan to tie student loan rates to the interest rates on 10-year Treasury bonds. House Republicans latched on to the president’s plan and passed a measure in May that was similar enough to the White House proposal to give Republicans solid political cover against Democratic attacks.

Then Mr. Manchin, Mr. King and Senator Thomas R. Carper, Democrat of Delaware, drafted a compromise that they thought would ease liberal concerns over the House bill. The compromise measure would neither raise money for the government nor cost it any money, and interest rates each year would be fixed for the life of the loan. The House bill would raise money for the Treasury and would allow rates to fluctuate with Treasury rates.

“Many say this is a Republican bill,” Mr. Manchin said. “On this side, it’s not. It’s a bipartisan bill.”

More liberal senators, led by Tom Harkin, Democrat of Iowa, who leads the Senate Health, Education, Labor and Pensions Committee, said that as the economy improved and interest rates rose, the proposal could lead to higher rates than if the 6.8 percent rate remained in force. They argued that a long-term resolution of the issue should be drafted over the coming year in a broad rewriting of federal higher education policy that is under negotiation.

Both sides said Wednesday that the failure of the Democratic bill would lead to last-ditch negotiations that could still yield a deal. But time for a breakthrough is slipping away for more than seven million students who receive subsidized Stafford loans. Most new loans for the coming school year will be issued at the beginning of August.

“The differences here are relatively small,” said Justin Draeger, the president of the National Association of Student Financial Aid Administrators. “This is what our country was designed to do, work out our differences, right?”

Regardless, Democratic divisions in the Senate may have handed House Republican leaders a rare victory in the fight for younger voters.

“Republicans acted to protect students from higher interest rates and make college more affordable, yet Senate Democratic leaders let student loan interest rates double without passing any legislation to address the issue,” Speaker John A. Boehner said after the Senate vote. “It’s long past time for President Obama to lead, address the divisions within his own party, and bring everyone together to enact a permanent solution.”