Senate showdown over student loan rates looms

Tuesday, May 8, 2012 - 10:53am

The fight over a potential doubling of student loan interest rates this summer hits the Senate floor Tuesday with Republicans promising to block a White House-backed plan unless Democrats allow a vote on a GOP alternative.

Interest rates on federal student loans are scheduled to rise to 6.8% from the current 3.4% in July unless Congress acts. But Democrats and Republicans disagree over how to offset the $6 billion it would cost to keep the rates down.

Democrats want to eliminate a tax break for some corporations while Republicans want to pull funds from a preventative health care fund set up under the health reform law.

Arizona Sen. Jon Kyl, the second-ranking Senate Republican, said Monday he believes a tough stand is necessary on this issue and will lead to compromise.

"We'll defeat cloture," Kyl said, using the legislative parlance for a key procedural vote scheduled for Tuesday that requires 60 votes to succeed.

If Republicans prove Democrats can't move a bill without GOP support, "I presume leaders in the House and Senate will get together and find a way to ensure the interest rate doesn't double," Kyl said.

An aide to Senate Majority Leader Harry Reid, D-Nevada, said negotiations over the issue are still under way.

Kyl said Republicans are "really disappointed" Reid has not agreed to hold a vote on the Republican funding alternative.

President Barack Obama, meanwhile, has led a high profile, multi-pronged lobbying push to pressure Republicans to support the Democrats' bill.

On Friday, he urged high school students to e-mail, tweet, and teach their parents to tweet a message to Congress.

"We can't price the middle class out of a higher education," the president said. "That's why we've got to make college more affordable."

The Republican-dominated House has already passed a version of the bill -- one that the White House warned late last month would be vetoed by the president if it also clears the Senate. The House version passed 215-195 on a largely party-line vote.

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