“We are very interested in a long-term solution,” Duncan said. “The idea of coming back every two years to try and fix something, with all the real challenges we face, and the fact that we can’t take this off the table… I just don’t understand it. I look forward to working with you and others to find some common ground.”

Duncan’s response to Klein here. 

HR 1911 is expected to be considered by the full House this Thursday.

The full Senate will consider the Farm Bill (S 954), which the Senate Agriculture Committee passed last week. The Farm Bill reauthorization , which would overhaul farm subsidies and food stamp programs, is expected to be considered by the Senate for the bulk of the floor action this week and again after the Memorial Day recess as well.

The full House is expected to consider and pass two bills passed by the House Education and Workforce Committee last week. First, HR 1949, the IPEDS Act is expected to pass on Wednesday of this week as a Suspension bill — or a bill that is considered a noncontroversial measure. Then, on Thursday, the House will consider  HR 1911, the Smarter Solutions for Students Act. This legislation would set interest rates on federal student loans to the 10-year Treasury note rate plus 2.5 percentage points for undergraduate loans and plus 4.5 percentage points for graduate loans as of July 1. Rates would be capped at 8.5 percent and 10.5 percent, respectively, and the interest rates would be calculated yearly. Amendments are expected to be offered to the bill.

The Office of Federal Relations is monitoring both bills closely and will continue tracking their progress.

The committee also marked up and approved HR 1949, the Improving Postsecondary Education Data Act for Students (IPEDS Act). The legislation would create a committee under the Department of Education to conduct a study on the factors students and families want, need, and already consider when choosing a higher education institution. This committee has a year to issue recommendations to assist congressional efforts to reauthorize the Higher Education Act.

The Office of Federal Relations is closely tracking this legislation and continues to work on this issue.

For more information on HR 1911, the Smarter Solutions for Students Act.

For more information on HR 1949, the IPEDS Act.

Options continue to multiply as the July 1 deadline raising the 3.4 percent interest rate to 6.4 percent is quickly approaching. Soon, colleges will begin originating loans for the fall semester not long afterward. Congressional insiders predict that if the rate is allowed to double, Congressional Republicans will likely lose their appetite for addressing the issue because students will not feel the impact immediately.

The many options, and the apparent disagreement among Senate Democrats and the White House, mean that the fate of any successful bill may rest on the House’s ability to pass a measure that will then be amended in the Senate. Further, it puts the Obama administration in the unusual position of being allied most closely with Congressional Republicans, making the some of the most unusual bedfellows.

How is the interest
rate determined?

• Current law: By Congress. Interest is 3.4% on subsidized Stafford; 6.8% on unsubsidized Stafford; 7.9% on PLUS loans.
• FY14 President’s Budget Request: 10-year Treasury rate plus 0.93 percentage points for subsidized Stafford loans; plus 2.93 points for unsubsidized
 Stafford loans; plus 3.93 points for PLUS loans.
• House Republicans (H.R. 1911): 10-year Treasury rate plus 2.5 percentage points for unsubsidized
 and subsidized Stafford loans; 
plus 4.5 points for PLUS loans.
• Reed and Durbin Bill: 91-day Treasury rate plus a percentage determined
by the Education Secretary to cover administrative costs.
• Warren Bill: By the discount rate the Federal Reserve charges to banks, at least for one year.

Is the interest rate varied over the life of the loan?

• Current law: No.
• FY14 President’s Budget Request: No. Rate varies from year to year for new loans, but is then fixed for life 
of loan.
• House Republicans (H.R. 1911): Yes.
• Reed and Durbin Bill: Yes.
• Warren Bill: No.

Is there an interest rate cap?

• Current Law: Not addressed.
• FY14 President’s Budget Request: No.
• House Republicans (H.R. 1911): Yes. 8.5% for Stafford loans; 10.5% for PLUS.
• Reed and Durbin Bill: Yes: 6.8% for subsidized Stafford, 8.25% for unsubsidized Stafford and PLUS.
• Warren Bill: Not addressed.

If a new loan was issued today under this plan, interest rates would be…

• Current Law: 3.4% for subsidized Stafford, 6.8% for unsubsidized Stafford, 7.9% for PLUS
• FY14 President’s Budget Request: 2.74% for subsidized Stafford; 4.74% for unsubsidized Stafford; 5.74% for PLUS
• House Republicans (H.R. 1911): 4.31% for subsidized and unsubsidized Stafford; 6.31% for PLUS
• Reed and Durbin Bill: Unclear what administrative costs would be.91-day Treasury yield is .04%
• Warren Bill: 0.75%.

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.

According to the administration’s College Scorecard, the University of Washington, including UW-Tacoma and UW-Bothell, all “score” exceptionally well compared to other post-secondary institutions in Washington state. This validates what we have been saying for a long time: the UW offers great value and a great education for Washington state residents!

OMB Sequester Report: In the report released last Friday, the Office of Management and Budget (OMB) warns the sequester would be “deeply destructive” to national security, domestic investments, and core government functions. The report outlines some $109 billion in automatic reductions – or sequester – triggered by last year’s debt limit agreement. The automatic cuts would reduce spending over the next decade across more than 1,200 federal accounts starting January 2, 2013, trimming defense by $54.67 billion, domestic discretionary spending by $38 billion, Medicare by $11 billion, and other mandatory spending programs by about $5 billion. The 394-page report estimated the reductions would reduce discretionary defense spending by 9.4 percent and domestic discretionary spending by 8.2 percent. The estimates are calculated based on the level of federal spending in FY2012. Spending in FY2013 is almost sure to be higher since the proposed six-month continuing resolution (CR) increases spending slightly for the fiscal year that begins October 1st.

Sequester and Higher Education: If Congress fails to head off the $109 billion in overall cuts for 2013 before January 2nd – part of $1.2 trillion in required cuts over the next decade through the sequester – most aspects of federal spending relating to higher education would face reductions of either 8.2 percent (for discretionary programs) or 7.6 percent (for mandatory programs), including appropriations to the National Institutes of Health (NIH) and the National Science Foundation (NSF). NIH, for example, would lose more than $2.5 billion from its more than $30 billion appropriation, a cut of 8.2 percent. The report does not specify how the NIH and other agencies would carry out the reductions internally. In addition to cuts in programs, the law would raise the 1-percent origination fee for unsubsidized Stafford student loans by 7.6 percent, to about 1.1 percent of a total loan. PLUS-loan and unsubsidized-loan fees would rise slightly, from about 4 percent to about 4.3 percent of a total loan. Pell Grants would not be affected by the sequester in the first year.