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Senate To Vote on Student Loan Compromise

1:55 PM, Jul 23, 2013   |    comments
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By Brian Tumulty
Gannett Washington Bureau

WASHINGTON - Some Senate Democrats are balking at supporting a bipartisan agreement on college loan interest rates that's expected to come up for a floor vote this week.

New York Sen. Kirsten Gillibrand said today she's "leaning against'' supporting the bill because of "very serious concerns'' she has about the impact on college students.

Four Democrats have proposed amendments to change the deal, which was announced last week by a bipartisan group that included Republican Sen. Lamar Alexander of Tennessee and Senate Majority Whip Dick Durbin, D-Ill.

The change in rates would be retroactive to July 1, when the old, subsidized rate of 3.4 percent doubled to 6.8 percent.

Instead of that rate, almost 9 million undergraduates who take out student loans this summer would get a 3.86 percentage rate.

The agreement ties loans to market rates, putting a ceiling of 8.25 percent on future undergraduate loans, 9.5 percent for graduate students and 10.5 percent for parent loans and gradPlus loans.

Senate leaders had hoped for a vote on the deal as early as today, but it's likely to be delayed until later this week.

Among the proposed changes, Sen. Patty Murray, D-Wash., wants all anticipated government savings to be used for the Pell grant program that's available to low-income students.

Sen. Jack Reed, D-R.I., wants to lower the caps on future interest rate increases, and Sen. Jeff Merkley, D-Ore., wants the legislation to be deficit neutral.

Sen. Bernie Sanders, an independent from Vermont who caucuses with the Democrats, wants to limit the legislation to two years so the Senate can reconsider the issue next year as part of a reauthorization of federal higher education programs.

Gillibrand said she will examine the proposed amendments.

"I have concerns about a floating rate,'' Gillibrand said. "I have a concern about how high these rates may go. I think it's inappropriate that the federal government makes money off of student loans. Student loans are necessary for our economy to grow, for our students to reach their potential and to provide more for their families.''

The Student Assembly of the State University of New York does not support the deal. Student Assembly spokesman Logan Kenny described the deal as a "quick fix'' that does not provide students with stability or consistency.

 

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