Democrats’ Student Refinancing Bill Dies in the Senate

Elizabeth Warren’s plan failed. But the campaigning around it is just getting started.

WASHINGTON, DC - JULY 11: U.S. Sen. Elizabeth Warren (D-MA) questions witnesses during a Senate Banking, Housing and Urban Affairs Committee hearing on 'Mitigating Systemic Risk Through Wall Street Reforms,' on Capitol Hill, July 11, 2013 in Washington, DC. The committee heard from the panel about the progress being made on reform provisions that improve financial stability. (Photo by Drew Angerer/Getty Images)
National Journal
Elahe Izad
June 11, 2014, 6:29 a.m.

Demo­crats’ plan to let Amer­ic­ans re­fin­ance their ex­ist­ing stu­dent loan debt failed to ad­vance in the Sen­ate on Wed­nes­day, fall­ing to the same fate as oth­er big cam­paign-cent­ric bills re­lated to equal pay and rais­ing the min­im­um wage.

In the end, the bill from Mas­sachu­setts Sen. Eliza­beth War­ren went down 56-38, not meet­ing the 60-vote threshold needed to ad­vance to a fi­nal vote. Three Re­pub­lic­ans—Susan Collins, Bob Cork­er, and Lisa Murkowski—joined Demo­crats in vot­ing for the meas­ure. Sen­ate Ma­jor­ity Lead­er Harry Re­id was the only Demo­crat to vote against the bill, after chan­ging his vote for pro­ced­ur­al reas­ons.

The bill was part of Demo­crats’ “Fair Shot Agenda,” their 2014 elec­tion-year le­gis­lat­ive plan to high­light eco­nom­ic is­sues that es­pe­cially af­fect young people and wo­men, in an ef­fort to mo­tiv­ate voters to back them in Novem­ber.

Re­pub­lic­ans had de­cried the pro­pos­al as a par­tis­an bill, which didn’t go through a com­mit­tee at the same time that the Health, Edu­ca­tion, Labor, and Pen­sions Com­mit­tee has been con­sid­er­ing the reau­thor­iz­a­tion of the High­er Edu­ca­tion Act, a massive law that deals with fed­er­al stu­dent aid.

Un­der the War­ren pro­pos­al (which has a com­pan­ion bill in the House), people with ex­ist­ing out­stand­ing debt would be eli­gible to re­fin­ance both fed­er­al and private loans at the same in­terest rates that cur­rent stu­dents get when tak­ing out new, fed­er­al loans. Un­der a stu­dent loan plan struck last year, that means that stu­dents tak­ing out new Stafford stu­dent loans pay 3.86 per­cent on un­der­gradu­ate and 5.41 per­cent on gradu­ate loans. Every year, the rates ad­just for new loans, be­cause the rate is tied to the mar­ket.

Let­ting people re­fin­ance their loans would cost $51 bil­lion in dir­ect spend­ing over 10 years, but it would be paid for through the so-called Buf­fett Rule (the plan to make sure that mil­lion­aires are taxed at at least 30 per­cent). In the end, the Con­gres­sion­al Budget Of­fice es­tim­ates that the bill would re­duce the de­fi­cit by about $22 bil­lion over that same time peri­od.

Fol­low­ing the same pat­tern as equal pay and min­im­um wage, Pres­id­ent Obama an­nounced ex­ec­ut­ive ac­tion this week re­lated to stu­dent loans, in­ten­ded also to el­ev­ate the is­sue bey­ond the Hill.

But while Demo­crats had been hop­ing the fail­ure of the stu­dent-loan bill would gen­er­ate loads of at­ten­tion, polit­ic­al Wash­ing­ton has been con­sumed all morn­ing with the shock­ing primary de­feat of House Ma­jor­ity Lead­er Eric Can­tor. Still, they plan to use the bill’s fail­ure as an­oth­er plank in their pitch that Re­pub­lic­ans don’t sup­port work­ing Amer­ic­ans.

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