College students from across the country listen as Howard University student… (Chip Somodevilla / Getty…)
WASHINGTON -- The political battle over President Obama’s plan to keep student loan interest rates from skyrocketing escalated as Senate Republicans blocked a Democratic proposal to tax wealthier earners to pay for it.
Republicans stopped the effort with a filibuster, even as some in the GOP view this as a politically risky move at a time when middle-class families continue to struggle to afford college. Rates for 7 million new undergraduate student loans are set to double to 6.8% on July 1 if Congress fails to act.
The vote was 52-45, failing to reach the 60-vote threshold needed to overcome the GOP filibuster. All Republicans voting opposed the effort, except Sen. Olympia Snowe of Maine, who voted present. Democrats voted to advance the proposal.
Sen. Mitch McConnell of Kentucky, the Republican leader, said the standoff could be resolved easily if Obama would negotiate an alternative plan. Republicans back a House-passed proposal that would gut a public health and prevention fund in Obama’s new healthcare law to pay the costs of keeping government-backed student loan rates low – a non-starter for Senate Democrats.
“Following the president’s lead, Senate Democrat leaders have decided to point the finger of blame instead of just solving the problem,” McConnell said, “which, of course, is ridiculous.”
Democrats have tapped the public health fund in the past but oppose the GOP plan to eliminate it entirely to pay the $6-billion costs of extending low loan rates for another year.
The GOP proposal was only narrowly approved in the House as dozens of Republicans voted against it, many because they do not believe the federal government should be in the loan business.
The House vote sent a signal that Republicans would need the support of Democrats to pass any compromise. The GOP objects to the Democratic proposal to close a tax loophole that allows profits from so-called S-corporations to escape certain taxes. Under the proposal, those profits would be taxed for companies with fewer than three employees who earn more than $250,000 for married couples, or $200,000 for singles.
“If Republicans would stop filibustering our legislation and this instance to keep student loan interest rates low -- if they want some other way to pay for it -- let's take look at it,” said Senate Majority Leader Harry Reid (D-Nev.)
Original source: Republicans block Senate proposal to keep student loan rates low