WASHINGTON, DC -- The Senate is steaming toward a showdown on a Democratic proposal to keep student loan interest rates from doubling for 7.4 million students. In a measure of how the upcoming election is driving work in Congress these days, it's a vote Democrats won't terribly mind losing -- which is probably what will happen.
The Senate planned a Tuesday roll call on the plan, which would extend today's 3.4% interest rates on subsidized Stafford loans for another year. Without congressional action, those rates will double July 1.
Republicans say they favor freezing student loan interest rates but oppose how Democrats would finance the $6 billion bill: by raising Social Security and Medicare payroll taxes on high-earning stock holders of some privately owned corporations.
"They know we're particularly upset about this" financing plan, Sen. Michael Enzi, R-Wyo., said as the Senate debated the bill Monday. He said Democrats hope that when Republicans oppose the bill, it will "make it look like Republicans want to raise the rates on students, and that's not true."
As if issuing a dare, Senate Majority Leader Harry Reid, D-Nev., said, "Republicans claim they share Democrats' goal in protecting these 7 million students I've talked about from these interest rate increases. We'll see."
Republicans are demanding a vote on their own alternative. It would block the rate increase but pay for it by killing a preventive health fund created by President Barack Obama's 2010 health care overhaul.
That idea is a non-starter with Democrats and could not pass the Senate. The GOP-led House approved a bill two weeks ago paid for that same way, and the White House immediately threatened to veto it.
Without support from the other side, neither party will have enough votes to push its measure to passage. But the issue has become a high-profile, symbolic tussle over which party wants to do more for Americans scrounging to get by at a time jobs are hard to find, and each side is happy to force the other to take embarrassing votes.
With both parties focused on this November's presidential and congressional elections, it is no coincidence they each have chosen to pay for their bill with a favorite target that they believe speaks to their core voters: Democrats going after higher revenues from the rich, Republicans trying to punch a hole in Obama's health care overhaul.
Behind the scenes, aides from both parties have been trying to find a consensus way to pay for the bill. With neither party eager to appear to be causing college students to bear higher costs, conventional wisdom is that eventually a compromise will be struck, but first the political posturing will have to play out.
Subsidized Stafford loans are for low- and middle-income students. The higher rates, should they occur, would only affect students taking out new loans starting July 1.
The Education Department estimates 7.4 million students will borrow $31.6 billion in such loans in the year beginning July 1, averaging $4,226 for each student.
These loans generally are paid off over a decade or more after graduation. Allowing interest rates to double would cost the typical student about $1,000 over the life of the loan, the administration says.