POLITICS: PennAve

Fight over student loan rates intensifies

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Beltway Confidential,Education,PennAve,Sean Lengell,Student Loans

The partisan divide widened Tuesday over how best to lower interest rates on federal student loans that automatically doubled last week, with no compromise in sight ahead of a key Wednesday vote.

Senate Majority Leader Harry Reid, D-Nev., has proposed a one-year interest rate freeze at 3.4 percent on new federal Stafford loans - the same rate before it jumped to 6.8 percent on July 1. A vote on his proposal is expected Wednesday, though it's doubtful it will get the 60 votes needed to pass, as few Republicans are expected to support it.

"We have shown a willingness to compromise, but it is time for Republicans to do the same," Reid said. "The Republicans aren't willing to take anything other than what they've offered, and we can't go for that."

Republicans instead are pushing Senate Democrats to accept a GOP-crafted House-passed version or a bipartisan Senate proposal. Bothtie interest rates to the financial marketsand are similar to a proposal from President Obama.

Republicans say the House and bipartisan versions would make loans available to more students as opposed to the Reid plan, which offers loans to those who demonstrate financial need.

"We've got a Democratic proposal that would help É low-income students who already are eligible for Pell grants. They're already getting their interest subsidized on their student loans," said Senate Minority Leader Mitch McConnell, R-Ky. "But it leaves 7 million middle-income undergraduate American college students twisting in the wind."

The plan floated by the bipartisan Senate group offers a long-term fix that ties interest rates to the 10-year Treasury note. Among its backers are Democratic Sens. Joe Manchin of West Virginia and Tom Carper of Delaware, Maine independent Angus King, and Republican Sens. Richard Burr of North Carolina, Tom Coburn of Oklahomaand Lamar Alexander of Tennessee.

Reid hasn't scheduled a vote on the bipartisan bill, causing frustration for both Democratic and Republican supporters.

"We've asked for [a vote]; hopefully we will" get one, Carper said.

An aide to House Speaker John Boehner accused Reid of "stunning indifference and hypocrisy" for failing to get the House and bipartisan Senate plans consideration.

"Last year, Sen. Reid said that 'we cannot afford to put college out of reach' by allowing student loan rates to double.This year, the deadline has passed, rates have doubled and he's just throwing a temper tantrum," Boehner spokesman Michael Steel said.

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