This vote was on a procedural motion that would have cleared the way for a separate vote on whether the Senate should consider legislation preventing student loan interest rates from doubling.
Democratic leaders hoped to bring the Senate’s attention to legislation that would prevent a hike in the interest rate students must pay on their federally subsidized Stafford loans. By law, the interest rate was set to jump from 3.4 percent to 6.8 percent for loans taken out after July 1, 2012. The Democratic bill would keep the rate at 3.4 percent for another year. The change would mean less revenue for the government, so the cost would be offset by closing a legal loophole that allows a small group of corporations to avoid paying federal payroll taxes. The new payroll tax revenue gained from closing this loophole would be collected only from individuals who earn more than $200,000 per year.
To clear the way for a vote on whether to consider this bill, the Senate voted on a motion for “cloture,” which sets a timeline to end a debate that would otherwise be unlimited in duration. Failure to pass the cloture motion essentially dooms the effort to bring the bill up for consideration.
Supporters of the motion argued that although Republicans had first resisted the effort to keep student loan rates low, members of both political parties – and even Republican presidential candidate Mitt Romney – had since expressed support. The Democratic student-loan bill would help students from middle-class and lower-income families without adding to the federal deficit, they said.
“College is already unaffordable for far too many Americans, and we cannot afford to put higher education any further out of reach. So Senate Democrats have introduced a proposal to freeze student loan interest rates at current levels for a year, without adding a single penny to the deficit,” Sen. Harry Reid (D-NV) said. “Our legislation closes a loophole that allows the rich to avoid paying taxes they already owe. Our proposal is not a new tax. It would simply stop wealthy Americans from dodging the taxes they are required to pay. If Senate Republicans are truly serious about protecting 7 million students, they will work with us to pass this reasonable proposal.”
Opponents of the motion argued that the student-loan bill would hurt the economy by raising taxes on U.S. businesses. They also argued that it would hurt elderly Americans by diverting payroll taxes – which are normally used to support Social Security and Medicare – to the student loan program. They touted an alternative plan that would pay for the lower student loan interest rates by cutting a federal program aimed at increasing access to preventative health care.
“At this time, most of us agree that Congress should extend the lower interest rate on certain Stafford loans,” Sen. Jon Kyl (R-AZ) said. “Unfortunately, the majority leader's proposal is going to make the underlying jobs problem worse by burdening job-creating businesses with new taxes and compliance costs.”
Even though the motion to end debate on whether to consider the student-loan bill was supported by 52 senators and only 45 voted “nay,” the motion failed because it was brought up under Senate rules that require 60 votes for passage. Voting “yea” were 52 Democrats. Voting “nay” were 44 Republicans. Senate majority leader Harry Reid (D-NV) voted against the motion because a “nay” vote allows him to call a re-vote on the issue at a later date. As a result, the Senate defeated the effort to bring up legislation that would prevent student loan interest rates from doubling.