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Category: Student Aid

Senate focuses on Farm Bill and House focuses on Student Loans for the bulk of the week

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The Senate and House continue to work though legislation that respective committees addressed last week.

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.

House Committee Moves on Student Loan Fix

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Today, the House Education and the Workforce Committee marked up and two measures on to improve college costs and data transparency. The committee modestly amended and approved HR 1911, the Smarter Solutions for Students Act by a vote of 24-13, which ran largely along party lines. The amended HR 1911 would peg interest rates on all federal student loans, except Perkins loans, to the 10-year Treasury note rate plus 2.5 percentage points for undergraduate loans with a cap of 8.5 percent and plus 4.5 percentage points for graduate loans with a cap of 10.5 percent. Interest rates would be calculated and reset yearly.

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.

Charting the student loan interest rate proposals

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As the Office of Federal Relations continues to track the proposals and progress made on legislation affecting the student loan interest rate, below is a chart highlighting the proposals to date and major proposals.

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.

Continue reading “Charting the student loan interest rate proposals”

Progress on Student Loan Interest Rate Bill

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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.

Summary of President’s FY14 Budget Request

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Yesterday, President Obama released his FY14 budget request — nearly two months later than required by law. Much of the delay was blamed on the sequester and the prolonged FY13 appropriations process that resulted in a year-long continuing resolution (CR). In a typical year, the President’s Budget Request (PBR) kicks off the annual appropriations season, but with the delays, Congress has moved forward with their own budget proposals. This leaves us with three very different budget proposals with which to base the annual appropriations process. In other words, the process is once again sure to be a mess come later this fall. Our April Federal Update reviews the PBR and highlights those agencies and programs that we care about the most. You can also access the PBR and all the supporting documents at: http://www.whitehouse.gov/omb/budget.