GOP blocks Senate debate on Dem student loan bill

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By ALAN FRAM, Associated Press

WASHINGTON (AP) — Senate Republicans blocked a Democratic bill Tuesday to preserve low interest rates for millions of college students' loans, as the two parties engaged in election-year choreography aimed at showing each is the better protector of families in today's rugged economy.

The 52-45 vote to begin debating the legislation fell eight votes short of the 60 needed to proceed and stalled work on an effort both parties expect will ultimately produce a compromise, probably soon. For now, each side is happy to use the stalemate to snipe at the other with campaign-ready talking points while they are gridlocked over how to cover the $6 billion cost.

Senate Majority Leader Harry Reid, D-Nev., said the vote showed that despite GOP claims that they support preventing an increase in student loan rates, "Republicans showed today that it's only talk."

He also noted that the likely GOP presidential candidate, Mitt Romney, supports a temporary extension of today's low rates and needled, "I suggest he pick up the phone and call Senator McConnell."

That was a reference to Senate Minority Leader Mitch McConnell, R-Ky., who said the battle is a phony one manufactured by Democrats to woo votes from students. Both parties say they want to extend low interest rates.

"The Senate has ceased to be a place where problems are resolved. It's become instead a place where Democrats produce campaign material," McConnell said.

The vote was nearly party-line, with Reid voting "no" to give himself the procedural ability to demand another vote once a compromise is reached. Sen. Olympia Snowe, R-Maine, voted "present," saying she wanted to avoid any vote that might affect a private education business of her husband, John McKernan.

The Democratic bill would keep interest rates for subsidized Stafford loans at 3.4 percent for an additional year, rather than doubling automatically for new loans starting July 1. It would have no impact on current loans.

A 2007 law approved by a Democratic Congress gradually lowered the rates but pops them back up to 6.8 percent in July because lawmakers were worried about costs.

Stafford loans are for low- and middle-income students. The Education Department projects the measure would affect 7.4 million undergraduates borrowing money in the year starting July 1.

Republicans oppose the Democratic plan to pay for the bill by forcing high-earning stockholders in some privately owned corporations and professional practices to pay additional Social Security and Medicare payroll taxes. Even if it passed the Senate, it would have no chance of emerging from the Republican-controlled House.

Democrats reject the GOP version, which drums up money for the extension of low rates by abolishing a preventive health program created by Obama's 2010 health care overhaul. Republicans are demanding a Senate vote on their measure but it cannot pass that chamber, and the White House has threatened to veto a House-passed bill that uses that same funding mechanism.

Both sides know they can push no student loan bill through Congress without a bipartisan consensus on paying for it.

But with politics the governing dynamic for now, it was no coincidence that each side proposed snatching savings from favorite targets that appeal to their parties' core voters: the rich for Democrats and Obama's health care revamping for Republicans.

The issue has been a favorite of Obama's in recent weeks as he appeals to student voters who flocked disproportionately to him in his 2008 presidential campaign. He turned to it again Tuesday during a visit to the State University of New York in Albany, where he tried raising pressure on lawmakers to act.

"Before they do anything else, Congress needs to keep student loan rates from doubling for students who are here and all across the country," he said. He added, "Don't let politics get in the way. Get this done before July 1."

Underscoring the political stakes, the Senate Democratic campaign organization distributed an email soon after the Senate vote saying that two Republicans facing tight re-elections this fall — Sens. Scott Brown of Massachusetts and Dean Heller of Nevada — decided to "side against students, middle class families by voting to double student loan interest rates."

Playing defense, Sen. Marco Rubio, R-Fla., sometimes mentioned as a potential running mate with Romney, said he still has student loans and supports preventing loan rates from rising. He said he could not support the Democratic plan because it would raise taxes on "the kinds of small businesses that give jobs to graduates who not only need low interest rates but need jobs in order to pay their student loans."

Neither party wants to be blamed for letting students' costs grow larger in the middle of the presidential and congressional campaigns, so both have strong motivations to cut a deal. For now, each is daring the other to make the first move.

McConnell told reporters that Reid might want to call House Speaker John Boehner, R-Ohio, "and say, 'Why don't we resolve this matter and move on with it, rather than leaving all these young people with a sense of uncertainty.'"

"Boehner has no votes over here," Reid snapped later, saying that if Republicans want to offer alternatives for paying for the bill, "Let's vote on them."

Stafford loans are generally paid off over a decade or more after graduation. Allowing interest rates to double would cost the typical student about $1,000 over the life of the loan, the administration says.

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