Senator Warren bucks her party on loan bill
Fights compromise over students’ rates
WASHINGTON — Senator Elizabeth Warren, in her highest profile act of party defiance since being elected, is challenging President Obama and top Senate Democrats by urging colleagues to vote against a compromise proposal to temporarily lower student loan rates.
Senate majority leader Harry Reid and his lieutenants predicted the bipartisan measure would still pass this week despite the opposition of Warren and other New England senators, but they are trying to prevent an embarrassing number of Democratic defections.
Republicans, including House leaders, largely support the bill, which would bring interest rates on subsidized federal student loans from 6.8 percent to 3.86 percent for millions of undergraduates, then tie the interest rates to market rates with a cap of 8.25 percent.
The interest rates doubled on July 1 to 6.8 percent because Senate Democrats and Republicans were unable to agree on a compromise until now.
Not leaving anything to chance, concerned White House officials held a press call Tuesday promoting the compromise and urging lawmakers to pass the bill at once, saying it was similar to what the president had proposed in the spring.
Highlighting the importance of the issue for young voters — a core Democratic constituency — the White House released state-by-state impacts of the compromise. In Massachusetts, 191,213 undergraduates would see their interest rates on new loans drop, saving the typical student $1,439 over the life of the loans.
Under the proposal, graduate students and parents of undergraduates would pay higher rates than undergraduates: 5.41 percent with a cap of 9.5 percent for graduate students, and 6.41 percent with a cap of 10.5 percent for parents.
Warren has stuck to a hard-line position, joined by most of her Democratic colleagues from New England.
They are pushing to extend the 3.4 percent rate for undergraduates for another year so members could craft a long-term fix that does not involve the government profiting from student loans. Most economists expect rates to rise as the economy improves.
In an e-mail to supporters on Tuesday, Warren lashed out at her colleagues for putting forth a “so-called compromise” bill that she said amounted to little more than a “teaser rate for our student loan system’’ that would make “$184 billion in profits over the next 10 years.”
“I can’t support a proposal that squeezes even more profits out of our kids,” Warren wrote. “In fact, I think this whole system stinks.’’
Warren again pressed her case directly to her Democratic colleagues at a closed-door caucus luncheon Tuesday, but they seemed to leave the luncheon unmoved, said a senator in attendance.
Warren, who campaigned last year on reducing the costs of student borrowing, proposed a measure in May to lend students money at the same discount rates granted to big banks. The measure would have set the rate at 0.75 percent for the first year, but it never reached the floor for a vote.
Senate majority whip Dick Durbin, an Illinois Democrat who helped craft the bipartisan compromise, pointedly told Warren last week to face political realities.
While Durbin shared Warren’s goal of lower rates, he said, “we don’t have the votes to achieve it. We don’t have them in the Senate. We don’t have them in the House. So the question is, will we do nothing?
“Walking away from this bipartisan approach is going to mean more debt for today’s students and higher interest payments, and I don’t think that is fair,” Durbin said on the Senate floor Thursday.
Approached in a Senate corridor on Tuesday, Warren declined to comment further, saying “call my office.’’ A spokeswoman said she has a policy of not speaking to reporters in Senate hallways.
Edward Markey, Massachusetts’ junior senator, praised Warren’s stance and said he backs her opposition to the compromise bill.
“The federal government is in the business of making money off of blue-collar students across the country,” Markey said. “I’m going to oppose plans that substantially increase the rates that students pay in the future.”
Republicans took political advantage of the fissure among Democrats.
“Ironically, the Obama administration and the House Republicans are a lot closer together on the student loan program than the Senate Democrats,” said Senator Susan Collins, a Maine Republican.
Senator Mitch McConnell, the Republican leader, called on Democrats Tuesday to end their bickering.
“Senate Democrats still continue to fight with each other over the student loan bill, 23 days past the deadline they themselves warned about,” McConnell said on the Senate floor. “Democrats need to finally allow the bipartisan student loan reform proposal to come to a vote this week.’’
Angus King, a Maine independent who cosponsored the bipartisan compromise, chided liberal Democrats.
“There are lots of things the Democrats might want but if the votes aren’t there to make those happen, the point is to try to get the best that you can,” King said. “That’s how this place has to work.”
Later this week, Reid is expected to allow consideration of amendments, including an amendment Warren is cosponsoring with Senator Jack Reed, a Rhode Island Democrat, that would cap rates for undergraduates and graduate students at 6.8 percent and parents’ rates at 7.9 percent.
“At a minimum, we should pass Senator Jack Reed’s amendment, which would cap federal loans under this proposal at current interest rates, so no student would be worse off,’’ Warren said in a statement.
Senator Bernie Sanders, a Vermont independent, has also sponsored an amendment with Patrick Leahy, a Vermont Democrat, and Sheldon Whitehouse, a Rhode Island Democrat, that would sunset the compromise bill in two years, before interest rates are expected to rise.
“It’s absolutely imperative that this proposal be defeated,” Sanders said of the compromise bill.
“We have a crisis right now in terms of student indebtedness and the idea of passing legislation that in a few years down the road is going to make the situation much worse is absolutely absurd,” he said.
Senator Richard Blumenthal, a Connecticut Democrat, said he would vote against the bill if his colleagues fail to adopt Sanders’ amendment.
“The fact is, it’s a bad deal,” Blumenthal said. “I understand the temptation of this deal but we must reject a compromise that saves the American Dream for one sibling in a family by taking away from another.”
Whitehouse said he is still weighing his decision.
“The majority of the caucus doesn’t like the bill as it is,” Whitehouse said, “but given the realities of where the Republicans want to be, I think this is a kind of hold-your-nose-and-vote moment for a lot of my colleagues.”
Correction: An earlier version of this story included a sentence that mischaracterized Warren’s stance on allowing interest rates to rise. The sentence has been removed.