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Category: Student Aid

House to take up Senate-passed Student Loan Deal Today

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The House is expected to consider and vote on a bipartisan student loan deal that passed the Senate last week on an 81-18 vote. The deal ties interest rates to the rate on 10-year treasury bonds.  The bill is intended to be a long-term solution and also a retroactive fix to July 1st of this year when loan rates doubled from 3.4% to 6.8%. The legislation will set interest rates this year at 3.86% for all new undergraduate Stafford loans, 5.4% for graduate Stafford loans, and 6.4% for PLUS loans. Caps for loans are set at 8.25% for undergraduate loans, 9.5% for graduate loans, and 10.5% for PLUS loans. While this means that undergraduate loan rates for the next couple of years will hover around a low 4%, there’s a potential that eventually rates could rise higher than they are now before they bump up against the caps.

The vote is set to take place this evening and is expected to pass.

 

Bipartisan Agreement Reached on Student Loan Rates

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A bipartisan group of senators appear to have reached a deal that would provide a long-term fix to student loan rates, allowing them to increase up to a ceiling of 8.25 percent. Lawmakers on both sides of the aisle are supporting the compromise, which also would bring both subsidized and unsubsidized Stafford loans under the same interest rate for the first time. The rate on unsubsidized loans doubled on July 1st from 3.4 percent to 6.8 percent.

Under the new compromise plan, the rates for all undergraduate student loans would be harmonized. Currently, unsubsidized Stafford loans carry a higher rate than subsidized loans, which are available to lower-income borrowers. Under the bill, all undergraduate students would take out loans equal to the 10-year Treasury bond plus 2.05 percent — a deal that would bring student borrowing rates back down to 3.86 percent in 2013.

Graduate students, and loans taken out by parents on behalf of their children, would also get have their rates tied to Treasury bonds, and receive caps of 9.25 percent and 10.5 percent, respectively. Graduate loans would be set to Treasury bond rates plus 3.6 percent, and the so-called PLUS loans for parents would be equal to that rate plus 4.6 percent.

Senate Majority Leader Harry Reid (D-NV) said that he hoped to move the bill quickly, before Congress breaks for the August recess – and before students and parents have to sign loan documents for the 2013-14 academic year.

Things Heat Up in Congress

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Congress returns to work this week under a heat advisory for our fist long stretch of very hot and humid weather in DC. Today is predicted to see 94 degrees in the nation’s capitol, but it will feel more like 101 according to weather.com. And today will likely be the coolest day of the week! The good news (or bad news?) is that most of the action will take place indoors as Congress continues to slog through their cluttered agenda.

FY14 Appropriations: Appropriators in both chambers continue to move their FY14 spending bills forward this week, with the House ready to take up a $512.5 billion defense spending bill that accounts for more than half of the $967 billion in FY14 discretionary spending being considered in that chamber. On Wednesday, House Appropriations will also mark up the $47.4 billion Commerce-Justice-Science bill. The panel the same day will mark up a $17 billion Financial Services bill that would cut the Internal Revenue Service budget by nearly a quarter. Senate Appropriations subcommittees mark up their version of the Commerce-Justice-State and Homeland Security spending bills on Tuesday.

The major issue remains to be the $91 billion budget gap between the two chambers. The House and Senate are preparing spending bills that adhere to vastly different overall numbers, which will make reconciling any of these bills near impossible before September 30th. It is almost certain that we will see short-term continuing resolution this fall, with the final outcome unknown at this time. Continue reading “Things Heat Up in Congress”

July Federal Update

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FY14 APPROPRIATIONS

The path to enacting FY14 appropriations measures is paved with legislative friction as Congress is showing no signs of undoing the sequester and the House and Senate chambers are working on vastly different overall budget numbers. At this point, there are three budgets — House, Senate, and White House — all of which assume no sequestration, but include different ways to account for the cuts in later years.

The House is advancing its FY14 appropriations bills at a $967 billion overall spending cap, while the Senate is working with a $1.058 trillion cap, which does not take into account the sequester. Ironically, both the House and Senate plans would trigger a new round of across-the-board spending reductions under sequestration because they violate the caps set by the 2011 Budget Control Act (PL 111-25). But the House GOP plan busts the caps in defense and other security measures while the Senate is expected to bust the caps in both defense and non-defense (domestic) bills. All of this is leading to a big fight on spending, which will certainly culminate in a continuing resolution (CR) before the federal fiscal year ends September 30th. Continue reading “July Federal Update”

Student Loans: Cloture Vote Fails but Senate Makes Possible Deal

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The Senate failed to invoke cloture and move forward S 1238, the Keep Student Loans Affordable Act, which is a measure that would keep the Stafford subsidized interest rate at 3.4 percent for another year.

The vote was 51-49 and 60 votes are needed to invoke cloture, which would end debate on the measure.

However, later Wednesday evening, a bipartisan group of Senators, including Majority Whip Dick Durbin, announced a long-term student loan agreement.

Continue reading “Student Loans: Cloture Vote Fails but Senate Makes Possible Deal”