May 10, 2013
Progress on Student Loan Interest Rate Bill
Although both chambers are in recess today, there’s plenty of behind-the-scenes legislating and negotiating. House lawmakers plan to release a draft 2013 farm bill that’s expected to produce $38 billion in savings over a decade. Across the Capitol, Senate Democrats are looking for ways to advance President Obama’s nominee to head the Environmental Protection Agency – Gina McCarthy – who is having a tough time getting Republican support. The Administration also is engaged in talks with Republicans to head off a scheduled student loan interest rate hike. And there are efforts afoot to revise a Senate Internet tax bill in the House in an effort to gain support from conservative lawmakers.
A deal aimed at preventing federal student loan interest rates from doubling on July 1 appears possible after both sides made concessions on Thursday. A House Republican bill (HR 1911), that could be marked up next week, would treat the subsidized and unsubsidized portions of the Stafford federal student loan the same, pegging their interest rates to the 10-year Treasury rate plus 2 .5 percent. The legislation would also shift loans for graduate students to the 10-year Treasury rate plus 4.5 percent. Those interest rates would be capped at 8.5 percent and 10.5 percent, respectively. According to the Congressional Budget Office, the bill would save the federal government $990 million over five years and $3.7 billion over 10 years.
This measure largely mirrors a proposal included in President Obama’s FY2014 budget to shift the current fixed interest rate to a market-based variable rate. The House is poised to move the measure through that chamber by Memorial Day, plus or minus a week.