Democrats Are Trying a New Tactic on Student Loans: It’s a Women’s Issue

A new Senate bill from Elizabeth Warren is expected to come up next week. And Republicans are expected to shoot it down.

Sen. Elizabeth Warren (D-MA), Sen. Dianne Feinstein (D-CA), Sen. Kirsten Gillibrand (D-NY) and other Democratic sentaors hold a news conference to announce their support for raising the minimum wage to $10.10 at the U.S. Capitol January 30, 2014 in Washington, DC.
National Journal
Elahe Izad
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Elahe Izad
June 5, 2014, 1 a.m.

First, it was a min­im­um-wage in­crease. Next, the Paycheck Fair­ness Act. And now, Demo­crats are pitch­ing a bill to ad­dress stu­dent-loan debt as a wo­men’s is­sue.

Next week, the Sen­ate will con­sider a bill from Demo­crat­ic Sen. Eliza­beth War­ren that would let Amer­ic­ans with out­stand­ing fed­er­al and private stu­dent loans re­fin­ance them at the same rates stu­dents re­ceive when tak­ing out new fed­er­al loans.

Stu­dents tak­ing out new Stafford stu­dent loans pay 3.86 per­cent on un­der­gradu­ate and 5.41 per­cent on gradu­ate loans. The War­ren bill would let people with pub­lic and private loans re­fin­ance their in­terest rates at those levels.

The bill is the latest in a series of le­gis­lat­ive pushes by Sen­ate Demo­crats in­ten­ded to rile up their base ahead of this year’s midterm elec­tions. On Wed­nes­day, a cadre of fe­male Demo­crat­ic sen­at­ors high­lighted the prob­lem of stu­dent-loan debt as an is­sue of par­tic­u­lar im­port­ance to wo­men, who en­roll in col­lege at high­er rates than men do. They also ar­gue that wo­men, after gradu­at­ing, earn less than their male coun­ter­parts.

“It’s a one-two punch,” War­ren said. “Wo­men take on big debts to go to col­lege but they have less money to pay off those debts.”

And just as with the min­im­um-wage boost and equal-pay bill, few Re­pub­lic­ans will be back­ing this pro­pos­al, mak­ing it likely headed for fail­ure in the Sen­ate.

Why isn’t there GOP sup­port? For one, the bill would be paid for through the so-called Buf­fett Rule, which would change the long-term cap­it­al gains tax to en­sure mil­lion­aires are taxed at at least 30 per­cent. And rais­ing taxes is a non­starter for Re­pub­lic­ans. (Demo­crats say they are open to al­tern­at­ive pay-fors.)

The Con­gres­sion­al Budget Of­fice es­tim­ates the pro­pos­al would re­duce the de­fi­cit by about $22 bil­lion over 10 years. That’s be­cause the new pro­gram would cost $51 bil­lion in dir­ect spend­ing over that peri­od while the Buf­fett Rule would raise rev­en­ues by $72 bil­lion.

But it’s not just the way Demo­crats pro­pose to pay for the le­gis­la­tion that has Re­pub­lic­ans roiled. Re­pub­lic­ans will likely ar­gue that the pro­pos­al wouldn’t be­ne­fit new or ex­ist­ing stu­dents, just those with ex­ist­ing debt.

The Sen­ate Health, Edu­ca­tion, Labor, and Pen­sions Com­mit­tee has spent this year work­ing on a reau­thor­iz­a­tion of the High­er Edu­ca­tion Act, a massive law that deals with fed­er­al stu­dent aid. Rank­ing mem­ber Lamar Al­ex­an­der said this par­tic­u­lar pro­pos­al should be con­sidered in that con­text.

“We’re go­ing to take three days out next week for a polit­ic­al stunt that every­body knows hasn’t been con­sidered by the com­mit­tee and won’t pass the Sen­ate,” Al­ex­an­der said.

He ad­ded that he’s ex­amin­ing pos­sible GOP coun­ter­pro­pos­als to bring up dur­ing the de­bate next week.

Still, Demo­crats are bank­ing on pub­lic sup­port for their policy pitch. Stu­dent-loan debt has already sur­passed cred­it-card debt in the U.S., adding up to $1 tril­lion. And a re­cord-high 37 per­cent of house­holds headed by someone young­er than 40 has stu­dent-loan debt, ac­cord­ing to the Pew Re­search Cen­ter.

“Re­pub­lic­ans would at their per­il stop this bill from mov­ing for­ward,” says Sen. Patty Mur­ray, D-Wash. “We are hear­ing an over­whelm­ingly pos­it­ive re­sponse across the in­come levels, across the age levels, across our states about how im­port­ant this le­gis­la­tion is.”

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