GOP leaders keep pushing Senate Dems on student loans

{mosads}When Congress broke for its recess with no student loan compromise in place, Republicans were quick to blame Senate Democrats for the rate hike. The interest rates on new subsidized Stafford student loans jumped to 6.8 percent for 3.4 percent on July 1, as a temporary halving of that rate expired with no action from Congress.

Republicans quickly pointed out that they passed a bill addressing the rates in May, while competing Republican and Democratic bills failed to gain sufficient support in the Senate.

The House Republican bill would tie the rate on those loans to the 10-year Treasury bill, similar to a proposal included in the White House budget. But the Obama administration threatened to veto that measure, arguing the GOP plan would reset rates each year, whereas the White House plan would lock in rates when the loans were made.

A group of centrist senators announced they had crafted a compromise bill just days before the deadline, but Senate Majority Leader Harry Reid (D-Nev.), refused to sign off on the agreement, arguing that any interest rate measure should be deficit-neutral. The compromise bill included about $1 billion in deficit reduction.

The Senate is poised to continue debating a retroactive fix to the rate matter this coming week, and will continue to debate competing alternatives. The compromise measure reached in the final days of June will be on the table, as will a measure from Sen. Jack Reed (D-R.I.) that would return rates to 3.4 percent for one year, paid for by ending a tax break on tax-deferred retirement accounts. Most Senate Democrats support that measure, but it looks to be a non-starter with House Republican leaders.