Student loan issues have a funny way of taking center stage in Washington during the summer months. That’s been particularly true the last couple of years thanks to a student loan interest rate that was set double every July 1, which, like clockwork, prompted partisan bickering in Congress over how to pay to maintain the low rate.
Thankfully, Congress provided a permanent fix to the problem last year, but that hasn’t stopped higher education from making its seasonal debut. A bevy of issues are heating up that are already prompting some partisan mudslinging, including the start of Senate floor debate on a Democratic loan refinancing proposal, and an executive order that President Barack Obama signed Monday to cap interest rates.
U.S. Sen. Lamar Alexander, R-Tenn., didn’t waste any time Monday taking to the Senate floor to slam the Democratic bill, calling it a “partisan, political stunt.” In an interview with Education Week earlier Mondday, he questioned whether the administration has the authority to pursue the series of executive actions Obama signed at the Rose Garden.
The Democratic proposal, which is championed by Sen. Elizabeth Warren of Massachusetts, would allow those with outstanding student loan debt to refinance at the lower interest rates currently offered to new borrowers: 3.86 percent for undergraduate loans, and 6.41 percent for graduate loans and for parents who take out loans for their children’s undergraduate tuition. It would also allow eligible student loan borrowers in good standing to refinance their private loans into the federal program, also at the same rates.
“It does nothing for current and future students and amounts to a $1-a-day subsidy for old student loans,” Alexander said of Warren’s bill. “College graduates don’t need a $1-a-day taxpayer subsidy to help pay off a $27,000 loan, which is the average federal loan for 4-year degrees—they need a decent job.”
Of importance to those holding out hope for reauthorization of the Elementary and Secondary Education Act, Alexander also urged his colleagues to shift focus from helping students repay their loans on the back end to making college more affordable on the front end, beginning with an update to the law.
“Better schools mean higher college graduation rates, and that means better jobs,” he said. “The best way to prepare students to complete college in four years or less and really reduce college costs is to raise standards, improve tests, fix failing schools, and evaluate and reward outstanding teachers.”
Alexander reiterated that both chambers have overhauls of the bill ready for debate. “These competing proposals have been thoroughly considered by the Senate and House education committees and are ready for floor debate—action that is seven years overdue since No Child Left Behind expired in 2007,” he said.
Remember, Alexander was the former Education Secretary under President George H. W. Bush and is slated to chair the Health, Education, Labor and Pensions Committee should Republicans take control of the Senate next year, so his comments provide some insight into how he would tackle these issues if there’s a changing of the guards.
Warren on May 6 introduced her proposal, officially titled the “Bank on Students Emergency Loan Refinancing Act.” It’s backed by 35 of her colleagues in the Senate, dozens of left-leaning organizations, and the National Education Association and the American Federation of Teachers.
In the House, Democrats John Tierney of Massachusetts and George Miller of California introduced a companion bill. But it won’t likely see the light of day in the Republican-controlled chamber. The bill’s pay-for makes it a virtual non-starter for conservatives: It would be funded by imposing a higher minimum tax rate on taxpayers in the highest income bracket, a proposal backed by the Obama administration and commonly known as “the Buffet Rule,” named after billionaire Warren Buffet, who believes wealthy individuals shouldn’t pay a lower percentage of income in taxes than those less affluent.
As for the administration’s executive actions, they aim to allow more students to qualify for a program that caps borrowers’ repayments at 10 percent of their monthly income. You can read more about the executive actions he signed over at the College Bound blog.
“I see it as something that the president has questionable authority to do,” said Alexander, who also urged the president to work with the ongoing bipartisan effort in the HELP Committee to reauthorize the Higher Education Act.
“This is a big task, but we have a number of senators working across party lines to get a result,” he said about the HEA reauthorization. “If we can, we’ll have a bill before the end of this year. If we can’t we’ll have it teed up for next year.”