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September 2, 2014

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Reid challenges GOP to find a way to pay for student loan rate fix

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Leila Navidi

South Complex on the campus of UNLV in Las Vegas on Wednesday, August 22, 2012.

Now that the Senate has rejected both party’s proposals to stave off a hike in student loan rates, Senate Majority Leader Harry Reid is doubling down on Republicans: Come up with something to pay for an extension of current rates, or no deal.

“I would hope that they come back to us with something that’s reasonable,” Reid said Thursday morning, shortly after the Senate voted down a Democratic proposal 51-46, and a Republican proposal by 57 to 40. Both needed 60 votes to pass.

“If we do nothing,” Reid added, ”we’re better off than what the Republicans want.”

Reid is walking a hard line on student loans, in which he effectively rejects the favored approaches not only of Republicans, but also the White House, to keeping loan rates from rising.

There are no fewer than a half-dozen proposals floating around Washington. Most would peg the federal loan rate to 10-year Treasury note market rates, plus some margin. In some proposals -- such as the White House’s -- the size of that additional margin would vary depending on whether the loan is being awarded to students or their parents, and whether or not the award is being made based on need.

But Senate Democrats say there is not enough time to talk about pegging the student loan rate to the market rate before July 1. Thus according to Sen. Patty Murray, when Reid tells the Republicans to bring him fresh ideas, he means fresh ways to pay for the Democrats’ plan.

“I think there’s discussions about that that we cannot resolve in the short time frame,” Murray said. “We want to look at how we do this in the future but we want to set them where they are right now so we don’t leave students in crisis.”

Democratic leaders have been defending their stance by accusing far-right Republicans of trying to kill the student loan program altogether.

“The reason that it’s so hard to extend the rate on student loans is that the right would like to end the student loan program altogether,” said Senate Democrats’ messaging chief, Sen. Charles Schumer. “The public is with us on this issue. That’s why we prevailed a year ago and got the rate extended…and that is why we will prevail in the coming weeks.”

Reid also charged that President Barack Obama had already said he would veto the Republican proposal, which Reid said would let student loan rates triple. The White House objected to the House Republican proposal because it ties loan rates to the market rate, but leaves them variable for the life of the loan.

Earlier this week, Senate Republicans addressed those concerns with a proposal that would maintain a student’s initial loan rate for the life of the loan. The White House has not threatened to veto that Republican proposal, which the Senate rejected Thursday, and Senate Republican leaders have said they would be willing to compromise on the details.

But Reid also rejected the idea that there were meaningful differences between the Republican proposals coming from the House and Senate, or that there might be room for compromise between the Senate Republicans and the White House’s preferred approaches.

“You can try to rationalize this any way you want…you can listen to all the Republican talking points that you want, but theirs is not even close to what we want,” Reid said to a reporter Thursday who asked him about the potential for compromise, repeating again that the White House had threatened to veto the “Republican proposal” – without specifying which one he meant.

Instead, Reid challenged Republicans to come up with a better way to pay for the extension of current rates than the Democrats’ suggestion of covering the difference through ending oil and gas subsidies.

“Republicans can help us with this and get it done by accepting closing these tax loopholes,” Reid said. “But we can’t do something that’s so foolish as what they’re suggesting.”

Student loan rates are supposed to double, from 3.4 percent to 6.8 percent, on July 1.

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