The U.S. Senate will vote Wednesday on a Democratic plan to scale back federally subsidized student loan rates, but a divided Congress is no closer to compromise on the issue that affects roughly 200,000 Minnesota college students.
The Democratic proposal would extend for another year the previous 3.4 percent rate, which doubled to 6.8 percent last week. Supporters, including U.S. Sens. Al Franken and Amy Klobuchar, say the short-term solution will provide Congress ample time to reform the student loan system.
Plans to rescind the increase may come up short though: a similar push last month by Senate Democrats to extend the lower rate for two years failed when Republicans enforced the 60-vote threshold required for a vote.
House Republicans, including U.S. Rep. John Kline, accused Senate Democrats of shortchanging students because the Senate failed to act on the interest rate increase before the July 1 deadline.
"I find it incredibly frustrating that we're having a fight in Washington about an issue that just shouldn't be partisan," Franken said.
Under the Republican proposal, student loan rates would initially fall below the current rate of 6.8 percent because interest rates are historically low. But, as interest rates rise, the GOP plan would allow rates to rise above that threshold, opponents say.
"What [Senate Democrats are] trying to do on the floor tomorrow is just not make this worse," Franken said.
U.S. Sen. Debbie Stabenow said White House Chief of Staff Denis McDonough assured her that President Obama supports a one-year extension.
ButHouse and Senate Republicans don't appear willing to budge and allow Congress to once again determine the loan rates. Democrats also remain undeterred.
If the rates hike remains, college student with subsidized Stafford loans could face an additional $1,000 in debt.