“WASHINGTON — The U.S. Senate on Thursday rejected student loan proposals that would have either temporarily helped only a small subset of new borrowers or been likely to aid borrowers who take out federal loans just for the next few years, as debt-strapped households continue to wait for far-reaching solutions.
Policymakers and financial regulators caution that economic growth and the health of the U.S. banking system is at risk as borrowers with a cumulative $1.1 trillion in student debt, many of whom are paying record relative interest rates on their government loans and enriching the Treasury with unparalleled profits, are likely to curb consumption, big purchases, and new borrowing due to overwhelming debt loads.
Despite increasing warnings, Congressional Democrats are focused on saving the typical undergraduate borrower less than $10 a month on an average 12-year-loan, while promising to take additional steps in the coming months to help the vast majority of new and existing borrowers. Their bill failed to attract the necessary 60 votes, securing just 51 votes instead.
Republicans aim to replace the current system of rates on all government loans being set by Congress to one dictated by the government’s cost to borrow, with apparently little regard to the fact that the government’s borrowing costs are forecast to double in three years. The Republicans could muster just 40 votes….”
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