After months of partisan bickering and grandstanding, tentative deals, and compromises, the Democratic-controlled U.S. Senate finally passed a bill, 81 to 18, that would link student loan interest rates to market forces.
That could mean lower rates for students come this fall. But it could result in higher rates in years to come—which is why some Democratic senators, and groups that advocate for students (such as the Education Trust) aren't so happy with the bill.
Some background: Rates doubled from 3.4 percent to 6.8 percent back on July 1. Even before that happened, lawmakers and the administration were trying to work out a compromise, with very little success. Finally, a bipartisan group of lawmakers, including Sens. Tom Harkin, D-Iowa, the chairman of the Senate education committee, and Lamar Alexander of Tennessee, the top Republican, hammered out a bill before the start of the school year. The administration has endorsed the legislation.
Why should anyone in the K-12 world care? Well, these lawmakers are also in charge of elementary and secondary education—they'll have to work out an eventual compromise on renewing the No Child Left Behind Act. Watching the political dynamics among these folks is key.(The upshot? Apparently, they can finally pull together, but they need a hard deadline. And there will almost definitely be a ton of drama.)
Plus, the debate has implications for college access. More here.
During debate, Harkin made it clear that this legislation isn't his ideal solution, but he thinks it's a good compromise.
"Don't let anyone tell you this is a bad deal for students," Harkin said during debate. He noted that students' loan rates would not top seven percent for the next five years. "Any way you look at it, this is a good deal for students and a good deal for their families. ... Don't let the perfect be the enemy of the good."
But Sen. Bernie Sanders, an Independent from Vermont who caucuses with the Democrats, had a much more critical take.
"The White House is being disingenuous and is trying to sweep under the rug big increases in interest rates for students and parents in the near future," Sanders said in a statement. "Because college costs are out of control and interest rates are rising, students are leaving college deep in debt or in some cases choosing not to continue their education because they cannot afford it."
Under the measure, nearly 9 million undergraduate borrowers would see rates on new, subsidized loans drop from 6.8 percent to 3.86 percent. Graduate students could borrow at 5.4 percent. The legislation also proposes reducing rates for about 1 million GradPLUS and Parent PLUS borrowers from 7.9 percent to 6.41 percent, according to my colleague, Caralee Adams of College Bound fame.
And in a concession to some Democrats, including Harkin: Undergraduate loans would be capped at 8.25 percent, graduate loans at 9.5 percent, and PLUS loans at 10.5 percent.
The measure now goes to the U.S. House of Representatives for its approval.
This wasn't the only action on higher education today in Congress. The House Education Committee approved a bill that aimed at repealing mandates affecting higher education, including the gainful-employment regulations designed to curb abusive practices by career education programs. Caralee has the goods at College Bound.
Photo: Sen. John Thune, R-S.D., chair of the Senate Republican Caucus, speaks with reporters just before the U.S. Senate approved a plan Wednesday to restructure the government student loan program. (J. Scott Applewhite/AP)