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GOP tests Democrats on college loan issue

Offers bill based on Obama concept

Senate Republicans used a parliamentary move Thursday to force Democrats into a battle with President Obama over government subsidies for student loans, upping the stakes in the fight with less than three weeks to go before interest rates rise.

Under a temporary agreement reached last year interest rates were set at 3.4 percent on new subsidized federal Stafford loans, but that rate is set to jump to 6.8 percent on July 1.

Mr. Obama has called for a long-term fix that would see interest rates tied to the 10-year Treasury note, which would mean they would float higher than the current 3.4 percent fixed rate. Congressional Republicans agree in principle, though they have offered plans that would float the rate differently.

But Democrats on Capitol Hill have instead pushed for a freeze of the current rate.

On Thursday, Senate Republicans tried to force the issue by bringing to the floor a bill they said incorporated Mr. Obama's own plan.

That put Democrats in the position of having to object to the president's own proposal.

"Students, parents, families are asking for help," said Sen. Elizabeth Warren, the Massachusetts Democrat who has taken the lead on the issue. "They don't have time for politics."

But Sen. Richard Burr, North Carolina Republican, said the Democrats' extension plan doesn't fix the problem and only kicks the problem down the road.

"I'm sick and tired of waiting until the deadline," he said. "We're going to wait until the last day and dare each other not to do it."

A senior Senate Democratic aide said that until his party sees a copy of Mr. Burr's bill they can't verify it's the same as the president's plan. But Mr. Burr's office says his proposal was the same as the president's.

The Democrat-controlled Senate last week rejected a Republican alternative student loan proposal by Mr. Burr and Sens. Tom Coburn of Oklahoma and Lamar Alexander of Tennessee that was similar to the Obama plan. The interest rate would change from year to year, but once the loan is taken out the rate would remain unchanged for the life of the debt.

"I don't agree with all aspects of [the president's proposal], but it's a start," Mr. Burr said. "It's the nucleus of a compromise."

But many Democrats oppose the Obama/Republican approach because student loan rates would fluctuate with market forces, instead of being fixed.

Mrs. Warren said that while she agrees the Democrats' two-year proposed extension isn't an ideal solution, the issue is too serious to risk not doing something before the deadline.

"This [Senate Democratic plan] is to prevent our students from facing a doubling of their interest rates on July 1, and we say we will use this time to in order to get a comprehensive answer for all of our students."

The tit-for-tat between Mrs. Warren and Mr. Burr — as well as the broad issue of how to handle the expiring student-loan rate — was left unresolved in the Senate on Thursday.

Meanwhile in the House, Democrats tried a parliamentary tactic of their own to force a vote on the two-year extension propose. But the effort was rejected by Republicans, who control the chamber.

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