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October 30, 2014

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Senators steal Reid’s limelight to vent frustration on student loan stalemate

The Ohio Clock Corridor – a wide strip of worn, multicolored marble just outside the Senate Chamber named after a central, stately timepiece that was actually made in Pennsylvania – is prime real estate in the Capitol.

And every Tuesday, at about a quarter past two, it’s Senate Majority Leader Harry Reid’s turf.

But this Tuesday, two conservative Democrats and one Independent who caucuses Democrat decided to hold court in the corridor during Reid’s time, as the majority leader was himself trying to brief reporters on Senate business at the other end of the hall.

The reason? They have a bone to pick with their majority leader about student loans.

Sens. Tom Carper, D-Del.; Joe Manchin, D-W.V.; and Angus King, I-Maine, wouldn’t go so far as to accuse Reid outright of undermining their efforts to craft a bipartisan solution to the student loans crisis. But their physical position spoke to their frustration at being sidelined while the political battle over loan rates rages on.

Student loan rates doubled on July 1, from 3.4 percent to 6.8 percent for those loans intended for the neediest students. Reid is pressing Democrats and Republicans to vote for a plan drafted by Sens. Tom Harkin, D-Iowa, and Jack Reed, D-R.I., that would return the rates to 3.4 percent, retroactively applying the change so that students commencing loans for 2013-14 can enjoy the lower interest.

Reid has scheduled a Wednesday vote for the bill, which would reestablish the lower rates for one year.

The bill stands little chance of passing, as Republicans favor an approach that would peg the student loan interest rate to the 10-year Treasury note, plus a margin. President Barack Obama’s plan works off the same basic structure – though his margins are somewhat different than the ones in the Republican plans. Obama’s plan also caps payments at 10 percent of income.

Reid has dismissed the Republican proposals as “worse than nothing.”

“If you can explain to us why doing something is better than doing nothing, we’ll do it,” Reid said to reporters at one end of the Ohio Clock Corridor on Tuesday afternoon. “We’ve reached out to the Republicans and suggested changes…we’ve shown a willingness – it’s time for Republicans to do the same, and compromise.”

But Carper, Manchin, and King say the Republicans have compromised – suggesting it’s just Reid who is unwilling to accept the compromise.

“Republicans sat down and worked with us in good faith, and I think we’ve got a piece of legislation that fixes (rates) and brings rates down,” Manchin said at the other end of the Ohio Clock Corridor on Tuesday afternoon.

Carper, Manchin and King are lobbying to get their proposal to the floor for a vote at the same time the Senate votes on the Harkin-Reed plan Wednesday.

Like the plans being floated by Republicans, their bipartisan bill would also tie the student loan interest rate to the 10-year Treasury bond rate. But it would also establish a series of caps – on interest rates, on repayment rates, and on the length of time one must repay a loan before it can be forgiven – to make sure that low-income borrowers aren’t crippled trying to pay back their debt.

Under their plan, designed in concert with Republican Sens. Lamar Alexander, R-Tenn.; Richard Burr, R-N.C.; and Tom Coburn, R-Okla., interest rates would be fixed, and capped at 8.25 percent for consolidated loans, and a student’s repayment obligation would be capped at 15 percent of income earned over and above the poverty line. Students not able to pay back their loans in 25 years would have the balance of their debt forgiven.

Referring to the proposal as a Republican bill, Reid criticized the selling points of the bipartisan plan Tuesday afternoon, calling the caps “not true” because they only apply to consolidated loans. That, Reid argued, would leave anyone who might need to borrow money for school again in the future susceptible to higher repayment rates on all their grouped loans than they originally contracted.

“People wind up, as Sen. Harkin mentioned today, paying tens of thousands [of extra dollars],” Reid said.

Harkin, too, spent Tuesday throwing water on the idea of a bipartisan solution to the student loans crisis.

“The best thing to do is a one-year more extension,” Harkin said on the Senate floor Tuesday. “We expect to be putting together an authorization bill in the next year, and this is where student loans can be addressed.”

The Higher Education Act expires at the end of 2013. Harkin is the chairman of the Senate committee that addresses education, and will be retiring at the end of 2014.

“If we rush to judgment the losers are going to be students,” Harkin continued. “Let the committee do its work…that’s the responsible way to address this issue.”

But Carper, Manchin and King openly protested Reid’s suggestions, Harkin’s prescriptions, and both of their math.

“The idea that there aren’t any protections there? For sure, loans that are taken out now at 3, 4 percent – they’re going to be locked in for the life of the loan,” Carper said. “And what if interest rates go down after that? Well, we refinance the mortgage on our house, so why wouldn’t somebody want to refinance their student loan? We make sure they have the ability to do that.”

“A year ago, we were asked to vote for an extension. I voted for the extension thinking we would be serious about fixing something,” Manchin said. “How many years have come and gone and we’re still on extensions…and haven’t had fixes to anything?”

“This is not a Republican bill,” Manchin added. “It’s a bipartisan bill. And we’ve worked very hard on it.”

While he doesn’t seem to like their proposal, Reid has not entirely discounted it – nor did he express any disdain for the senators or their media gaggle at the other end of the hallway Tuesday.

“I admire and I respect a number of my senators who are working with Republicans trying to come up with something, and I continue to focus on that,” Reid said to reporters Tuesday.

But thus far, Reid hasn’t offered the bipartisan group the vote they are after.

Reid said Tuesday that he planned to hold meetings with Obama’s chief of staff, and Secretary of Education Arne Duncan, “to see if we can do something, if we can make a presentation to the Republicans that they can accept.”

If that presentation is mutually acceptable to Republicans and Democrats, it could be put on the floor for a vote without much lead time or advance notice.

Mid-afternoon Tuesday, Manchin admitted that he hadn’t received any indication yet from Reid that plans for Wednesday had changed.

“But no matter what you’ve heard, in the last minute, things can change,” he said.

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