Washington, D.C. - U.S. Sen. Lamar Alexander accused Senate Democrats of staging “a partisan political stunt” on Monday for pushing legislation that would let college students refinance their student loans at lower interest rates.
Alexander, a Maryville, Tennessee, Republican who served as education secretary under President George H.W. Bush, argued that the proposal does nothing for current and future students and amounts to a $1 per day subsidy for some old student loans.
“College students don’t need a $1 a day federal taxpayer subsidy to pay off a $27,000 student loan,” Alexander said in a speech on the Senate floor. “They need a job.”
Alexander’s remarks came as Senate Democrats were preparing to vote this week on a bill by U.S. Sen. Elizabeth Warren, D-Mass., that would let students who borrowed money at higher interest rates refinance those loans at lower rates that were approved last year for new borrowers. Supporters argue the refinancing plan would make student loans more affordable and would potentially save millions of dollars in student loan costs.
Alexander, however, said the bill is unfair because it treats former college students who have old loans better than current students or new students. Interest rates on old loans would be frozen, while rates on new loans may rise when market prices rise, he said.
Alexander, the senior Republican on the Senate Health, Education, Labor and Pensions Committee, also charged that the bill is unfair to taxpayers.
Under the Democrats’ plan, the tax revenue lost by allowing students to refinance their loans would be made up by raising taxes on the wealthy. Alexander said the proposal would raise individual income taxes by $72 billion and could add as much as $420 billion in new federal debt.
Alexander called for the proposal to be sent back to the education committee, which is involved in discussions to reauthorize the higher education act, which he said is the kind of “serious discussion” that produced a new law last year that cut in half interest rates for all new undergraduate student loans.