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A Democratic-led effort to keep interest rates on student loans low failed Wednesday to move forward in the Senate, setting the stage for fresh negotiations to help undergraduates avoid rates that are twice last year’s.
The White House-backed proposal from Democratic leaders would have kept interest rates on subsidized Stafford loans at 3.4 percent for another year while lawmakers took up a comprehensive overhaul. The one-year stopgap measure failed to overcome a procedural hurdle as Republicans — and a handful of Democrats — urged colleagues to consider a plan that would link interest rates to the financial markets and reduce Congress’ role in setting students’ borrowing rates.
The Senate vote was 51-49, nine votes short of the 60 votes needed to move forward. The Republican-favored plan was not considered for a vote in the Democrat-led chamber.
Without serious negotiations between the parties — and within a fractured Democratic caucus — students would face higher costs to repay their loans after graduation. Lawmakers pledged to return to negotiations to avert that.
“These students are struggling. Our economy is slowly recovering. Now is not the time to set up more barriers,” Senator Tom Udall (D-N.M.) said. “Now is not the time for interest rates to double – weighing down students, weighing down hardworking families, weighing down the middle class. …The average college senior has over $26,000 in debt at graduation. Some have much more. That burden is heavy enough. We should not be adding to it now.”
Udall is a co-sponsor of the Keep Student Loans Affordable Act and has encouraged Congress to prevent the rate increase on students for another year while lawmakers work on a broader, more comprehensive solution to skyrocketing college costs.
“Higher education is at a tipping point, and we need a long-term plan – a plan that is sustainable, that is comprehensive,” Udall said in his remarks. “These are complicated questions; they require careful answers. But one principle should be clear: For fairness, for investing in our nation’s future, college should be within reach of all American families – not just the privileged few.”
About 40,000 N.M. students rely on Stafford loans to pay for college. The Keep Student Loans Affordable Act would save new undergraduate Stafford loan borrowers at N.M. universities an average of almost $1,000 over the life of their loans.
Udall has long said he wants to see student loan rates considered in a comprehensive way, through reauthorization of the Higher Education Act, to make college more affordable for all families and find a long term solution that will help N.M. students.
Last year, Udall also voted to extend the subsidized rate for new Stafford undergraduate loans for one year, in order to give Congress time to work on the broader issue. Udall has also supported several bills in the last two years to maintain the subsidized rate on new undergraduate student loans.
Heinrich also voted on the measure and was disappointed in the result.
“Earning a college degree shouldn’t be a luxury, but something that every American family can afford,” Heinrich said. “A post-secondary education remains critical for thousands of students and their families in New Mexico. We need to give students a fair shot at succeeding in a tough economy, not saddle them with debt.”
The failure to win a one-year approval — combined with little interest in such a deal in the Republican-led House — meant students could be borrowing money for fall courses at a rate leaders in both parties called unacceptably high unless Congress tries again.
Officials said Wednesday’s vote would not be the final word on student loans and said the failure would nudge members from both parties back to the negotiating table.