Student Loan Relief: Republicans Kill Bill That Would Have Allowed Lower Interest Rates

Student loan relief is getting a major push from President Obama, but despite a new repayment system that will help millions of Americans, Republicans are still blocking other measures of relief for students burdened with debt.

This week, Obama signed an executive order creating an income-based repayment system. Known as the Pay As You Earn plan, the measure caps payments at 10 percent of a borrower’s discretionary income. The program is available for new borrowers as of October 1, 2007, and who had a loan disbursed after October 1, 2011.

But Republicans have stood in the way of other student loan reform efforts.

In the Senate, a student loan bill brought forth by Massachusetts Democrat Elizabeth Warren was killed when Republicans objected to including a tax on the wealthy to pay for it. The measure would have allowed those with older student loans to take advantage of the lower interest rates offered today.

The vote failed by a 56-38 margin, being shot down days after Obama called for Congress to take measures to ease student loan burdens.

After the vote, Elizabeth Warren called out those who stood in the way of student loan relief.

“Today is a really good day for billionaires,” she said. “For the 40 million people dealing with student loan debt, it wasn’t such a good day. This raises the fundamental question: Who does Washington work for? Does it work for those who can hire armies of lobbyists to make sure that every single loophole in the tax code is protected for them? Or does it work for young people who are trying to get started in life?”

But Republicans said the student loan efforts were really just political posturing by Democrats who wanted to score election-year points. They pointed out that the measure was bound to fail, as Senate Republicans have voiced their opposition to any measure instituting new taxes on the rich.

“The Senate Democrats’ bill isn’t really about students at all. It’s really all about Senate Democrats,” said Minority Leader Mitch McConnell, R-Ky. “They want an issue to campaign on to save their own hides this November.”

Democrats say they will remain committed to student loan relief, noting that some 40 million Americans have outstanding student loan debt equaling a collective $1.2 trillion. This makes student loans the second largest form of consumer debt, behind only mortgages.