Harkin helps push student loan bill through Senate

WASHINGTON - An unusual coalition of moderate Democrats and Republicans passed a long-sought bill to lower student loan interest rates on Wednesday, ushering in a possible breakthrough on stalled efforts to help students pay less for loans.

Senators voted 81-18 for a compromise bill that would initially keep rates low but eventually subject them to escalation. Rates would be tied to 10-year Treasury notes, plus a few percentage points, and would raise an estimated $715 million over the next 10 years.

Sen. Tom Harkin, D-Iowa, led the charge throughout the day, speaking three times on the Senate floor to urge colleagues to support the bill. Outspoken and public opposition from liberal Democrats had persisted in recent days, contributing to rumors that the bill would eventually fail because of liberal opposition. In the end, centrists from both parties provided the necessary votes.

“This was the best deal we could get for students at this time,” Harkin said.

Sen. Chuck Grassley, R-Iowa, also supported the bill, calling it “pretty darn good” and noting that it accomplishes goals sought by House Republicans and President Barack Obama.

“This is kind of one of those odd situations where Republicans in the House and the President were on the same wavelength,” Grassley said. “It also has the benefit of not kicking the can down the road, so we don't have to deal with the same thing next year.”

Because of congressional inaction before the July 1 deadline, rates for new Stafford loans already jumped from 3.4 percent to 6.8 percent. Existing loans are unaffected.

Without further congressional action, rates will stay at the 6.8 percent level.

Under the bill, crafted by Democrat Joe Manchin of West Virginia and Republican Richard Burr of North Carolina, undergraduates would face a 3.86 percent interest rate while graduates would have a 5.4 percent rate and parental loans would carry a 6.4 percent rate. The new rates also would include caps - 8.25 percent for undergraduate loans, 9.5 percent for graduates and 10.5 percent for parental loans. The non-partisan Congressional Budget Office has estimated that rates would not reach those limits within the next decade.

The bill still must be approved by the Republican-controlled House, continuing a torturous path for the legislation. The House in May passed a Republican-backed bill, which Democrats declared dead on arrival in the Senate. For its part, earlier this month, the Senate fell short in an effort led by Harkin to keep the rates at 3.4 percent for another year.

The House bill passed in May was largely similar to the current Senate bill because it also tied loan interest rates to market rates. That has raised hopes that the lower chamber will go along with the Senate bill approved Wednesday.

A report from the Project on Student Debt last fall said Iowa students had the sixth-highest average debt at graduation for the class of 2011, at $28,753. Nearly 8 million students across the country are expected to apply for new Stafford loans for the 2013-14 academic year.

Harkin, who chairs the Senate's Health, Education, Labor and Pensions Committee, has vowed to use his committee this fall to investigate escalating college costs.

Harkin displayed a chart during one of his floor speeches Wednesday that showed the cost of a bachelor's degree has tripled since the 1980s.