Student-Loan Debate Comes Into (Familiar) Focus in the Senate

Republicans and Democrats are trading punches, even before the real debate begins.

 A general view during the college commencement ceremony for Westminister College on June 1, 2013 in Salt Lake City, Utah.
National Journal
Michael Catalin
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Michael Catalin
May 7, 2014, 4:16 p.m.

Law­makers are already clash­ing over what is shap­ing up to be the next par­tis­an brawl in the Sen­ate: a Demo­crat­ic pro­pos­al that would al­low bor­row­ers to re­fin­ance stu­dent-loan debt, paid for by a tax on mil­lion­aires.

As de­tails emerge on the de­bate over col­lege af­ford­ab­il­ity, both sides are already throw­ing punches. Key Re­pub­lic­an sen­at­ors say the bill is simply polit­ic­al mes­saging, while Demo­crats are tak­ing to the floor to de­scribe the dire cir­cum­stances fa­cing stu­dent bor­row­ers.

The Bank on Stu­dents Emer­gency Loan Re­fin­an­cing Act is part of the Demo­crats’ Fair Shot Agenda, an elec­tion-year plat­form aimed at ex­cit­ing their base and demon­strat­ing the party’s con­cern for pock­et­book is­sues. The le­gis­la­tion has 26 co­spon­sors — all Demo­crats — and would let bor­row­ers with out­stand­ing stu­dent-loan debt re­fin­ance it at the 3.86 per­cent rate achieved after Con­gress passed the Bi­par­tis­an Stu­dent Loan Cer­tainty Act last year.

The bill pro­poses to pay for the meas­ure by ap­ply­ing the so-called Buf­fett Rule, a tax named after in­vestor War­ren Buf­fett that calls for a min­im­um rate of 30 per­cent on those earn­ing more than $1 mil­lion. Demo­crats are point­ing to the eco­nom­ic im­pact of stu­dent debt, with out­stand­ing loans now total­ing $1.2 tril­lion — even more than cred­it card debt, they say. Sen. Amy Klobuchar of Min­nesota re­mem­bers how her grand­fath­er paid her dad’s way through col­lege by sav­ing money in a cof­fee jar. There’s no jar big enough to pay today’s col­lege bills, she said.

“This stu­dent debt hangs like an an­chor around not just our stu­dents, but our en­tire eco­nomy,” Klobuchar said.

But the bill is a non­starter for many Re­pub­lic­ans, largely be­cause of the pro­vi­sion to pay for it.

“This looks like a dus­ted-off pro­pos­al to raise taxes, and that’s not something I think we need to do,” said Sen. John Cornyn, the minor­ity whip. “Our eco­nomy grew at 0.1 per­cent last quarter.”

Cornyn wouldn’t say un­equi­voc­ally that Re­pub­lic­ans would with­hold sup­port and keep the meas­ure from get­ting the 60 votes needed for floor ac­tion, be­cause he is still re­view­ing the le­gis­la­tion. But Re­pub­lic­ans gen­er­ally balk at the no­tion of rais­ing taxes. He also said Sen. Lamar Al­ex­an­der of Ten­ness­ee, the rank­ing Re­pub­lic­an on the Health, Edu­ca­tion, Labor, and Pen­sions Com­mit­tee, would mount the GOP’s re­sponse.

“This is kind of like a Tro­jan Horse, the best it looks to me,” Cornyn said. “I think you’re go­ing to hear very pos­it­ive and con­struct­ive pro­pos­als from our side. I think Sen­at­or Al­ex­an­der, among oth­ers, is go­ing to be lead­ing that ef­fort. We’re happy to en­gage on edu­ca­tion and on costs and af­ford­ab­il­ity, but I don’t think this is the right ap­proach.”

Pre­view­ing his con­fer­ence’s ex­pec­ted re­but­tal, Al­ex­an­der poin­ted to GOP pro­pos­als, in­clud­ing school-choice meas­ures and a re­vamp­ing of the Pell Grant sys­tem, as al­tern­at­ives. “The Demo­crats’ pro­pos­al is start­ing down the road of turn­ing a tril­lion dol­lars of stu­dent loans in­to grants and count­ing spend­ing in a way that the Con­gres­sion­al Budget Of­fice has told Con­gress not to do,” he said in a state­ment to Na­tion­al Journ­al, re­fer­ring to a de­bate over con­gres­sion­al ac­count­ing.

In­deed, Demo­crats ad­mit that they craf­ted this year’s le­gis­lat­ive agenda with midterm elec­tions in mind. Re­pub­lic­an cri­ti­cism of the bill has been swift, com­ing even be­fore the cham­ber be­gins de­bat­ing the meas­ure.

“It’s got a pay-for that’s un­ac­cept­able,” said Sen. Richard Burr of North Car­o­lina, who helped broker the stu­dent-loan bill last sum­mer.

Sen. Or­rin Hatch, the rank­ing Re­pub­lic­an on the Fin­ance Com­mit­tee, where the bill was re­ferred, also shot the le­gis­la­tion down.

“In­stead of lin­ing up polit­ic­al show votes, Demo­crats should be work­ing with Re­pub­lic­ans to ad­vance le­gis­la­tion that will cre­ate more jobs for young people and grow the eco­nomy,” he said in a state­ment.

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