This vote was on passage of a bill that would have prevented the interest rate on student loans from doubling.
By law, the interest rate on federally subsidized student loans was set to jump from 3.4 percent to 6.8 percent for loans taken out after July 1, 2012. The 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.
Supporters of the bill argued that it would protect students from a sudden increase in the costs of education while cracking down on “wealthy tax dodgers.”
“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.”
Opponents of the bill argued that it did not represent a long-term solution to the student loan problem, since it would merely extend the lower interest rates for one year. They also argued that Congress should not raise taxes on businesses at a time when the economy was still struggling to recover.
“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 51 senators supported the student-loan bill and only 43 voted “nay,” the bill was defeated because it was brought up under Senate rules that require 60 votes for passage. Voting “yea” were 51 Democrats. Voting “nay” were 42 Republicans and 1 Democrat. One Republican voted “present.” As a result, the Senate defeated legislation that would have prevented an increase in the interest rate on student loans.