Thank you Trakhak, loved666 and Moe Zhoost. Longer threaded stud on the pads would definitely help as there was no room for additional washers to space it out. Existing washer are special cupped self centering type so they don't mix and match well. I guess thicker pads and shorter arms would work. I hope to tinker with it a little more today or tomorrow. I like the idea of contacting Schwinn! They may have the shorter arms or a fix as the newer pic of this model that was posted on this thread shows no interference whatsoever. Thank you