Student loan debate in D.C. spotlight
WASHINGTON — Senator Elizabeth Warren will get her biggest showcase this week for her top issue — reducing student loan debt — as her bill heads to a vote Wednesday. But the plan by the Massachusetts Democrat to tax the wealthy so college graduates can refinance their loans is being labeled a political stunt by Republicans who say it stands little chance of becoming law.
Whatever the law’s fate, it is being used by Democrats as part of a midterm election package of populist proposals known as the “Fair Shot” agenda, designed to draw contrasts between the two party’s views on checkbook issues such as the minimum wage and equal pay.
“It’s a basic question on our values,” Warren said in an interview. “Does this country protect millionaires’ and billionaires’ tax loopholes? Or does it try to help young people who are just starting their economic lives?”
On Monday, Warren sat directly in front of President Obama in the East Room of the White House as he endorsed her bill while announcing his own plan to ease the student loan burden of millions of Americans.
“You’ve got a pretty straightforward bill here. And this week, Congress will vote on that bill,” Obama said. “I want Americans to pay attention to see where their lawmakers’ priorities lie here: lower tax bills for millionaires or lower student loan bills for the middle class. This should be a no-brainer.”
Obama’s support — even after Warren antagonized the White House last year by urging Democratic colleagues to vote against a bipartisan compromise bill to temporarily lower student loans — is an indication of how the administration is adopting some of her more populist policies as Democrats fight to retain control of the Senate in the upcoming midterm elections.
Following the speech, Obama signed an executive order to make as many as 5 million more borrowers eligible to cap their student loan repayments at 10 percent of their monthly income and forgive outstanding balances after 20 years of repayment.
Senator Lamar Alexander of Tennessee, the top Republican on the Senate’s education committee, called Warren’s bill a “partisan, political stunt” that has “no chance whatsoever” of passing, during a speech on the Senate floor Monday.
Although Democrats control the Senate, 55-45, they do not have the 60 votes needed to overcome a filibuster if Republicans unite in opposing the measure.
Warren’s bill “is not a worthy subject for our discussion this week when we’ve got veterans standing in lines at clinics and appropriations bills dealing with cancer and national military defense waiting to come on the floor,” Alexander said. “We thought last year . . . we had stopped the political stunts on student loans. We put a market price system on all new loans at no new cost to the taxpayers, no new debt, so that this wouldn’t become an election-year football but, apparently, it has at least for a week.”
Most of the biggest debt burdens — those over $100,000 — are held by a handful of graduates with advanced degrees. He said average four-year graduates owe $27,000 in loans and receive about $1 million more in lifetime earnings, according to a College Board study.
“College graduates don’t need a $1-a-day subsidy to help pay a $27,000 loan,” Alexander said. “They need a good job.”
Warren acknowledged that her bill faces an uphill battle, with no Republican cosponsors or even any Republican verbally agreeing to vote for it. The bill would allow graduates to refinance their loans at a rate available to current students — 3.86 percent — and would pay for that by closing tax loopholes for the wealthiest Americans.
Warren said she has already compromised by choosing the 3.86 percent, which Republicans had supported for new loans last year, a rate higher than she would have preferred. Many borrowers with outstanding loans pay interest rates of nearly 7 percent or higher, Warren said.
Warren said she is also open to Republicans’ ideas on how to finance the bill instead of taxing the wealthy.
Obama’s endorsement of the bill was also seen as a boost for Senator Jeanne Shaheen, a New Hampshire Democrat locked in a tough reelection campaign. She highlighted her support as a cosponsor of the bill in a Sunday op-ed article in Foster’s Daily Democrat.
Representative John Tierney, a Massachusetts Democrat, hopes to boost his reelection chances by introducing a companion bill in the Republican-controlled House. Tierney is facing another competitive race after eking out a ninth term in 2012 by the slimmest margin — 1 percent — since winning his seat in 1996.
“This is the classic issue of asking people who make an extraordinary amount of money to pay their fair share and give families and students an opportunity to get out from under,” Tierney said in an interview.
But he said the only prospect of success for the bill in the House is through public pressure.
“The public is going to have to step up and monitor their member and find out whose side their member is on,” Tierney said.
House Speaker John Boehner has not spoken about Warren’s bill directly but was cool to the student loan initiative Obama announced Monday.
“Today’s much-hyped loophole closure does nothing to reduce the cost of pursuing a higher education or improve access to federal student loans — nor will it help millions of recent graduates struggling to find jobs in the Obama economy,” he said in a statement.