WASHINGTON — Republicans in the U.S. Senate blocked a bill introduced by Sen. Al Franken to allow student borrowers to refinance their loans on Wednesday.
The bill, introduced by Franken and Sen. Elizabeth Warren and co-sponsored by Sen. Amy Klobuchar, would have let borrowers refinance their student loans down to the 3.86 percent interest rate from last summer. The interest rate on federally subsidized student loans increased to 4.6 percent this year because of a deal last year setting the rate to the cost of federal borrowing. Student borrowers are currently not allowed to refinance their loans.
According to U.S. Department of Education estimates, more than 561,000 graduates of Minnesota colleges would have been eligible for refinancing under the law.
But the bill would have cost the federal government $51 billion over ten years, according to the Congressional Budget Office, and Democrats pledged to pay for it by raising taxes on millionaires and billionaires, a proposal long unacceptable to congressional Republicans. Wednesday’s vote was 56-38, four short of the 60-vote threshold needed to break a filibuster.
“You can refinance a home loan; you can refinance a car loan; you can refinance business debt,” Franken said a press conference with Senate leadership after the vote. “Why not allow 44 million people [with student loans] to refinance their student debt?”
Democrats didn’t hide their intention to use the vote against Republicans in this November’s elections (only three Republicans supported the bill on Wednesday). At the onset of their press conference, Senate Majority Leader Harry Reid quoted David Brat, a conservative who upset House Majority Leader Eric Cantor in a primary election on Tuesday, who said Republicans should focus more on “Main Street rather than Wall Street.”
Senators said they hope to bring the bill up again before the end of the year.
“This was not a political stunt,” Franken said. “This was about helping millions and millions and millions of Americans.”
Devin Henry can be reached at email@example.com. Follow him on Twitter: @dhenry