In an effort to protect taxpayers and shield college students from a sharp increase in federal Stafford loan interest rates, 51 U.S. Senators today voted in favor of legislation authored by U.S. Senators Jack Reed (D-RI) and Tom Harkin (D-IA) to ensure student loan interest rates for more than 7 million undergraduate students do not dramatically increase this year. But without any Republican support, the bill fell short of the 60 votes needed to advance. The Senate also strongly rejected a Republican alternative bill that would make college more expensive for students in the long-term, by charging higher interest rates over the next decade to pay for deficit reduction.
The current fixed interest rate on Stafford federal subsidized loans is 3.4 percent, but that rate will double to 6.8 percent on July 1, 2013 unless Congress takes action.
After the vote, Senator Reed issued the following statement:
"This is like the sequel to the sequester. Republicans feel they can force gridlock and let middle-class Americans take a hit, but prevent corporations and millionaires from contributing an extra dime to reduce the deficit. Republicans want these need-based interest rates to rise. They may not say so directly, but just look at their bill. It would extract an additional $15.6 billion from students by charging them higher interest rates on federal student loans for the majority of the next decade.
"The federal government provides subsidized student loans to increase the number of Americans who can attain a college degree -- not to generate revenue.
"We do this because a college education is a means of empowerment. It helps individuals build a better life and helps our nation build a stronger economy -- generating more jobs and opportunity and strengthening the middle-class.
"Ask any businessperson in any community in America and they will all tell you: we need a well-educated workforce with more knowledge and critical thinking skills.
"Again: this should be a bipartisan issue. It used to be. In 2007, when we passed legislation reducing the rate on subsidized student loans to 3.4 percent -- the vote was 79-12.
"But today, Republicans made it clear they'd rather ask middle-class students to sacrifice than close a tax loophole on special interests. They claim it is important to avoid burdening our children and grandchildren with national debt, but are willing to bury these young people in student debt.
"We must not allow student debt to hold this generation back -- to hold our economy back.
"If Congress works together, it can make our financial aid system more effective, affordable, and sustainable.
"This is an issue of fairness. Instead of raising interest rates on families struggling to pay for college, Congress should close costly, special interest tax loopholes. This legislation will protect taxpayers and keep student loan interest rates affordable.
"I urge my Republican colleagues to come to the table to work with us in good faith, not for the simple sake of bipartisanship, but in the interest of what is best for all of our constituents, what is best for working families everywhere."