Senate Democrats Beat Back Vote On Student Loan Interest Rates

Corey Boles and Patrick Yoest
Dow Jones Newswires

WASHINGTON -(Dow Jones)- Senate Democrats staved off an attempt by Republican lawmakers Wednesday night to reduce the maximum interest rate the federal government can charge on loans to student borrowers, keeping intact its overhaul of the college lending market.

The Democratic plan would see private lenders banned from originating student loans and replace them with the federal government making all loans.

Sen. Lamar Alexander (R., Tenn.), an opponent of the student lending overhaul, introduced the measure on the Senate floor Wednesday. It would lower the maximum rate of interest the government could charge on loans to 5.3% from 6.8%.

“It would prevent the federal government from overcharging 19 million American college students on their student loans to help pay for the health-care bill and other government programs,” Alexander said on the Senate floor.

The lending shake-up is part of a health-care bill that, once it’s enacted, will complete the Democrats’ sweeping overhaul of the U.S. health-care system.

The vote was the seventh of what are expected to be dozens of votes called by Republicans in an attempt to amend and delay the health-care legislation. If even one of the votes are successful, the health-care legislation will have to return to the House for what would certainly be another close vote, delaying the implementation of the health-care measures.

The student lending changes would save $68 billion over 10 years, the Congressional Budget Office has said–money that would be used in part to pay for the health-care legislation.

Sen. Ben Nelson (D., Neb.) voted in favor of the Republican motion, the sole Democrat to break with his party.

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