New Bipartisan Senate Student Loan Compromise—But No Deal Expected Before July 1
Prepared by: Wes Huffman (whuffman@wpllc.net)
We thought many COHEAO members would be interested in the latest on the Stafford (and now PLUS) loan debate. A new bipartisan compromise from Sens. Lamar Alexander (R-TN), Richard Burr (R-NC), Tom Coburn (R-OK), Joe Manchin (D-WV), and Angus King, an Independent from Maine who caucuses with the Democrats.
The “Bipartisan Student Loan Certainty Act” requires that, for each academic year, all newly-issued student loans be set to the U.S. Treasury 10-year borrowing rate plus 1.85% for subsidized and unsubsidized undergraduate Stafford loans; plus 3.4% for graduate Stafford loans; and plus 4.4% for PLUS loans. The interest rate would be fixed over the life of the loan and the cap on interest rates for consolidated loans would remain at 8.25%. We have attached a summary of the bill from the five Senate offices. Additional information is also available online: http://goo.gl/QWvDT
This latest proposal appears to be a step forward toward compromise, but it is extremely unlikely we will see action in the Senate before July 1. Many key Democrats, including Majority Leader Harry Reid and Majority Whip Dick Durbin, have yet to sign on to the proposal. The following are excerpts from Politico and The Hill
But Adam Jentleson, a spokesman for Reid, signaled the deal would not be supported by the broader Democratic Conference. “There is no deal on student loans that can pass the Senate because Republicans continue to insist that we reduce the deficit on the backs of students and middle-class families, instead of closing tax loopholes for the wealthiest Americans and big corporations,” he said in an email.
“Democrats continue to work in good faith to reach a compromise but Republicans refuse to give on this critical point,” he added.
Majority Whip Dick Durbin said presented with the outlines of the bipartisan plan, student groups told Senate Democrats: “Let it double.” “We’d rather see it double to 6.8 than the alternatives we’ve seen,” Durbin said was the message from those organizations.
The most likely course of action is additional negotiations based off of this proposal and applying the “fix” retroactively to loans made on or after July 1. However, there are many variables at play and this debate remains very much a moving target. We will keep you posted.
