A Democratic plan to lower student loan interest rates and pay for it with a tax increase will go nowhere in the Senate, Republicans said Monday.
The Senate this week is expected to vote on legislation sponsored by Sen. Elizabeth Warren, D-Mass., and endorsed Monday by President Barack Obama, that would allow students to refinance their loans at interest rates ranging from 3.86 percent to 6.41 percent.
The legislation dovetails with Obama’s Monday signing of an executive order that will greatly expand the federal student loan forgiveness program.
While Obama did not discuss the cost of his executive action, the Warren proposal has a $58 billion pricetag.
Democrats propose paying for their legislation by implementing the so-called Buffett rule, which would require a minimum tax rate of 30 percent for people earning more than than $1 million annually.
But Republicans are almost universally opposed to raising taxes and they say the Democratic proposal does nothing to rein in rampant student borrowing and skyrocketing tuition prices.
Student loan debt now tops $1 trillion.
“This bill doesn’t make college more affordable, reduce the amount of money students will have to borrow, or do anything about the lack of jobs grads face in the Obama economy,” Senate Minority Leader Mitch McConnell, R-Ky., said in a statement.
GOP leadership aides said Democrats designed the bill to fail on the Senate floor in order to give their party talking points on the campaign trail.
With the Warren bill doomed, Obama painted Republican lawmakers as opposed to student financial aid and in favor of tax breaks for oil companies and millionaires.
“This week, Congress will vote on that bill,” Obama said. “And I want Americans to pay attention to see where their lawmakers’ priorities lie here. Lower tax bills for millionaires, or lower student loan bills for the middle class.”
Sen. Lamar Alexander, R-Tenn., who is the top Republican on the Senate Health, Education, Labor and Pensions committee, called the legislation a “political stunt,” and pointed to a provision in the Warren bill that would allow students with private loans to refinance with the government.
“Private debt becomes the government’s debt,” Alexander said.
Alexander pointed to a Congressional Budget Office report that said the current student loan plan, without the proposed expansion, will cost $88 billion over the next decade when the risk of default is factored in.
Alexander said the Warren bill has “no chance whatsoever” of passing the Senate, where Democrats need 60 votes to move legislation to the floor for debate. It will also face opposition in the House, where the GOP majority will decline to take up the measure.
Alexander said the GOP is eager to work on a student loan reform bill but Democrats have refused to participate in those talks. The Republican proposals, however, include eliminating some of the more generous loan options, which would be a nonstarter with Democrats.