June 11 (Bloomberg) -- The U.S. Senate blocked Massachusetts Democrat Elizabeth Warren’s proposal to let student-loan borrowers refinance their balances at lower interest rates.
By a vote of 56-38, with 60 required, the Senate failed to advance the measure, which drew Republican opposition in part because it would be paid for by imposing new taxes on wealthy individuals.
“This should not be a partisan issue,” Warren said on the Senate floor before the vote. “This is about economics. But it is also about our values.”
The student-loan measure is the latest element of congressional Democrats’ election-year focus on income inequality, which has included efforts to raise the minimum wage and continue expanded unemployment benefits.
Democrats maintain that alleviating the burden on student-loan borrowers, who have amassed more than $1.2 trillion in debt, would eliminate a drag on the economy.
Republicans Susan Collins of Maine, Bob Corker of Tennessee and Lisa Murkowski of Alaska voted with Democrats to move the bill forward. Majority Leader Harry Reid, a Nevada Democrat, voted no to preserve his ability to bring the measure up again.
Senate Minority Leader Mitch McConnell, a Kentucky Republican, accused Democrats of “playing politics” and holding a political “show vote.”
“Senate Democrats don’t actually want a solution for their students,” McConnell said before the vote. “They want an issue to campaign on.”
President Barack Obama issued an executive order this week to expand a program easing student-loan payments. Obama also endorsed Warren’s bill, which would let 25 million borrowers with federal and private loans refinance their balances using 2013-2014 interest rates for their type of loan.
For example, someone who took out an undergraduate Stafford loan in the 2011-2012 year at a 6.8 percent interest rate could refinance at the 2013-2014 rate of 3.86 percent.
The measure “would have provided immediate relief to America’s struggling student-loan borrowers,” Rory O’Sullivan, deputy director of Young Invincibles, a Washington advocacy group that focuses on issues including student debt, said in an e-mail.
The ability to refinance at current rates “is something we take for granted in other consumer credit,” said Maura Dundon, senior policy counsel for the Center for Responsible Lending, a Durham, North Carolina, group whose website says it fights predatory lending practices. “Why treat students differently?”
The bill is S. 2432.
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