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Efforts to curb interest hikes for college loans foiled

Democrats, GOP halt each others’ bids for subsidies

“It’s especially maddening because we had a commonsense answer that didn’t add a dime to the deficit,” Senator John F. Kerry said.

Mohamed Abd El Ghany/Reuters

“It’s especially maddening because we had a commonsense answer that didn’t add a dime to the deficit,” Senator John F. Kerry said.

WASHINGTON - Congressional partisanship scuttled the latest attempt to prevent student loan interest rates from doubling and piling more debt on 7 million college students, including 177,000 in Massachusetts, who already face tall odds to find decent jobs in a still-bleak economy.

On Tuesday, Senate Republicans blocked a Democratic proposal to keep so-called Stafford loan interest rates from rising to 6.8 percent from 3.4 percent on July 1, when the interest subsidies are scheduled to expire.

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The rise in interest rates could be especially burdensome to students in the Bay State, which ranks second only to Illinois in the average amount borrowed per student.

The 52-45 vote was along party lines and far short of the 60 needed to break a Republican-led filibuster. In a procedural move that would allow him to revisit the legislation, Senate majority leader Harry Reid voted with Republicans.

Democrats and Republicans agree about extending the loan subsidies, but can’t agree on how to cover their $5.6 billion cost.

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“We’ve got to find a way forward for our students, but it’s especially maddening because we had a common-sense answer that didn’t add a dime to the deficit,’’ said Democratic Senator John Kerry, who voted with his party.

Democrats sought to pay for the student loan subsidies by closing a loophole that allows stockholders to avoid some Social Security and Medicare payroll taxes.

Republicans, however, want to use money from the health law’s Prevention and Public Health Fund, which provides services including screenings for breast and cervical cancer. Democrats accuse Republicans of trying to repeal the program.

Last month, House Republicans set aside a Democratic proposal authored by Representative John Tierney of Salem that sought to finance the loan subsidies by stripping some tax breaks from oil and gas companies.

Instead, the House approved by a 215-195 margin a largely Republican-backed proposal that, like the GOP Senate plan, would draw from the health law’s prevention fund.

The White House had signaled that President Obama would likely veto the GOP House bill if it reached his desk.

As the Senate began floor debate today, Republican Senator Scott Brown of Massachusetts, who voted with his party to reject the Democratic plan, proposed legislation that he hoped would cut through the partisan divide.

Brown’s answer: Using money the government already has but mistakenly spends. Brown, citing data he says he obtained from the Office of Management and Budget, wants to use part of the $115 billion in “improper payments made by the federal government.’’ Such payments, his office said, include money sent to the wrong recipient, incorrect amounts, and improperly disbursed funds.

Brown proposes tightening payment rules and launching a pilot program to audit and recover improper payments.

“I’m not saying my bill is the only answer,’’ Brown said on the Senate floor. He called his proposal noncontroversial and a “neutral’’ point from which to resume discussion.

Whether Brown’s proposal can get a hearing will depend on the Senate’s Democratic leadership.

“What matters now for Democrats is that they find a way to drive a wedge between Republicans and a constituency that they’re looking to court ahead of the November elections. That’s what today’s vote is all about for them,’’ said Senator Mitch McConnell of Kentucky, the Senate’s top Republican.

For Amber Testa, 23, of Hopkinton, higher interest rates would add to the already heavy burdens faced by college students who face bleak odds of finding a job.

“My family’s been helping me with my debt, and when you’re unemployed its very daunting,’’ said Testa, who graduated from Roger Williams University with nearly $20,000 in student loan debt.

“Young people cannot afford to have their interest rates doubled. It’s one more thing we can’t handle,’’ she said.

Many of the students who could be hard hit by the rise in interest rates are community college students, and those from poor and working-class backgrounds.

In 2007, Congress lowered interest rates on Stafford loans to ease the burden on recent college graduates unable to find jobs because of the faltering economy.

The fight over the college loans is the latest example of the election-year partisan gridlock that grips Congress, as both parties bait each other for political advantage.

The Obama campaign reminded reporters that the presumed GOP presidential nominee, Mitt Romney, who visited a community college in Michigan on Tuesday, has “embraced the Ryan Budget, which would permanently lock in the higher interest rates, increasing the cost of college for hundreds of thousands of Michigan students.’’

In 2010, college seniors graduating from four-year schools had an average of $25,250 in college loan debts, according to data from the Project on Student Debt. Massachusetts ranked 12th in the country in student debt load, with the typical four-year college student amassing $25,541 in debt.

But among all students, including those attending community colleges, Massachusetts and California are tied for second nationally in student loan debt during the current school year, with the average student taking out $4,166 in loans, according to data from the US Department of Education.

The increase in loan defaults went up as the economy soured. In 2009, the latest data available from the government, the default rate for government-backed loans was 8.8 percent, with the bulk of the defaults generated by students who were enrolled in public schools.

Bobby Caina Calvan can be reached at bobby.calvan@globe.com. Follow him on twitter @GlobeCalvan.
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