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With federal student loan interest rates set to double on July 1, Congress returns from recess facing a familiar partisan brawl with no quick resolution in sight.
“This sounds like déjà vu all over again,” President Barack Obama joked at a Rose Garden rally on the issue Friday, surrounded by college students. “That’s because it is. We went through this last summer.”
Majority Leader Harry Reid, D-Nev., announced Friday that the Senate will vote during the first week of June on legislation to avert the scheduled interest rate increase. The vote could come as an amendment to the farm bill (S 954) that is pending on the floor, but will probably be done separately, a senior Senate Democratic aide said.
The aide said the chamber is likely to vote on two side-by-side student loan proposals: A Senate Democratic bill (S 953) to extend the current 3.4 percent fixed interest rate for two additional years, and the House-passed Republican bill (HR 1911) to avert the rate hike by shifting to a market-based variable rate that is pegged to the 10-year Treasury note.
Both measures would need a 60-vote threshold for passage and are likely to fail, according to the aide, potentially pushing both sides to come up with a compromise.
Republicans have said they have no appetite for again extending the current 3.4 percent interest rate, as Congress did last June (PL 112-141) after a three-month fight. Democrats propose paying for the $8 billion cost of such an extension by closing three tax loopholes.
From the other side, Obama and congressional Democrats have said they are open to shifting to a market-based variable interest rate — as called for in the bill passed by the House 221-198 on May 23 — and they have floated their own similar proposals. But Obama contends the House GOP’s particular formula would actually saddle college students with more debt than if student loan interest rates are allowed to double as scheduled.
“The House bill isn’t smart, and it’s not fair,” the president said Friday. “I’m glad the House is paying attention to it, but they didn’t do it in the right way.”
Republicans were quick to criticize Obama for holding a “campaign style” event and argued that the president is doing nothing more than inciting partisanship on an issue where there is much agreement.
“The president appears more interested in needlessly stoking partisan divisions in Washington than helping young Americans avoid a higher interest rate on their student loans,” Senate Minority Leader Mitch McConnell, R-Ky., said.
Speaker John A. Boehner, R-Ohio, emphasized the similarities between the House bill and the president’s proposal, a point Republicans have been hammering away at.