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Senate fails to freeze student loan rates
Detroit News - Marisa Schultz - July 11, 2013

About 7 million college students are still stuck with higher student loan rates after the Senate failed Wednesday to pass a plan to freeze low interest rates.

Rates on new subsidized Stafford loans rose July 1 to 6.8 percent from 3.4 percent.

The latest attempt Wednesday was backed by U.S. Sen. Debbie Stabenow, D-Lansing. The measure would have kept loan rates at 3.4 percent for one year to give Congress time to devise a long-term solution. The Senate blocked the measure in a 51-49 vote. Sixty votes were needed to overcome a filibuster.

“It is absolutely critical that Congress come together and pass legislation to reverse this rate hike and begin work on a long-term plan to make college more affordable for every student,” Stabenow said in a statement.

Another bipartisan plan in the Senate would tie student loan rates to the 10-year Treasury note. Stabenow and some other Senate Democrats didn’t back the plan because they argue it doesn’t offer protections to students when the market changes and rates swing upwards.

The GOP-led U.S. House already approved legislation in May largely along party lines that also tied the student loan rate to the 10-year Treasury note plus 2.5 percent. Maximum rates are capped at 8.5 percent. The House plan, which is similar to what President Barack Obama proposed in his budget, didn’t come up for a vote in the Senate.

U.S. Rep. Bill Huizenga, R-Zeeland, expressed frustration at the failure to pass a market-based approach similar to the way home mortgage and car loan interest rates are determined. Having Congress set rates has turned the issue into a “political football” that’s hurting students, he said.

“We need to get back to a market-based interest rate,” Huizenga said.