The national student debt clock ticked past $1 trillion today—a fitting backdrop for a vote in the US Senate about whether to allow federal subsidized loan rates to double on July 1. Alas, Senate Republicans refused to allow debate on a bill that would keep loan rates at the current 3.4 percent, and pay for the subsidization by eliminating a sneaky tax break for wealthy Americans.
The “Stop the Student Loan Interest Rate Hike Act of 2012,” sponsored by Senate Majority Leader Harry Reid, would lock in the current rates with revenue from increased Medicare and Social Security taxes on firms with three or fewer shareholders—known as “S Corporations.” Some wealthy Americans—like say John Edwards and Newt Gingrich—create S-Corps in order to treat only a small portion of their total earnings as taxable wages, thus avoiding the Medicare and Social Security taxes.
Every Democrat in the Senate, along with independent Senators Bernie Sanders and Joe Lieberman, voted for the bill—but every Republican except three voted against it, thus keeping it from reaching the sixty-vote threshold for debate.
