Student Loans

Interest rates on federal subsidized Stafford student loans are set to double from 3.4 percent to 6.8 percent on July 1. According to the House Committee on Education and Workforce, if Congress doesn’t act, the neediest students will see their costs increase by over $1,000 per year through repayment. 

Here’s a recap of what Congress has been working on to address student loan interest rates:

The House passed a bill, which hasn’t been considered by the Senate:

• HR 1911 In May, the House passed the Smarter Solutions for Students Act (HR 1911), which would reset student loan interest rates once a year according to the market — for new loans made after July 1, 2013. Stafford loan interest rates would be calculated based on the 10-year Treasury note plus 2.5 percent, and parent and graduate PLUS loans would be calculated using the 10-year Treasury note plus 4.5 percent. The legislation would also cap interest rates at 8.5 percent on Stafford loans and 10.5 percent on PLUS loans. (The White House has indicated that President Obama would veto this bill.)

Meanwhile, the House Democrats have a proposal, which hasn’t gotten a vote:

• HR 1595 Student Loan Relief Act: would extend the reduced interest rate for Federal Direct Stafford Loans. (House Democratic proposal, which has not gotten a vote.)

So the House Democrats are using an uncommon tactic to “discharge” the bill from the committee process and force it to a vote:

• Petition The Discharge Petition on the Student Loan Relief Act: would force a House floor vote on the Student Loan Relief Act of 2013 (HR 1595). (Learn more about the Discharge Petition.)

In the Senate, where bills must first pass a “cloture vote” to be voted on, there are two proposals that failed cloture votes:

• S 1003 Comprehensive Student Loan Protection Act: to amend the Higher Education Act of 1965 to reset interest rates for new student loans. (Senate Republican proposal; failed cloture vote.)
• S 953 Student Loan Affordability Act: to extend the reduced interest rate for undergraduate Federal Direct Stafford Loans, to modify required distribution rules for pension plans, to limit earnings stripping by expatriated entities, to provide for modifications related to the Oil Spill Liability Trust. (Senate Democratic proposal, supported by President Obama; failed cloture vote.)

With interest rates for student loans about to double, this is an issue that not only concerns graduates but may affect the US economy. Weigh in on POPVOX, and we’ll deliver your message to Congress. And also take a look at other proposals related to student loans in general.

Other student loan bills proposed in Congress

• S 707 Student Loan Affordability Act: to extend the reduced interest rate for Federal Direct Stafford Loans.
• HR 1595 Student Loan Relief Act: to extend the reduced interest rate for Federal Direct Stafford Loans.
• S 634 Service Members Student Loan Relief Act: to allow members of the Armed Forces and National Guard to defer principal on Federal student loans for a certain period in connection with receipt of orders for mobilization for war or national emergency.
• HR 532 Private Student Loan Bankruptcy Fairness Act: to modify the dischargeability of debts for certain educational payments and loans to treat privately-issued student loans the same as other types of consumer debt during bankruptcy.
• HR 618 Student Loan Default Prevention Act: To authorize the Secretary of Education to enter into voluntary, flexible agreements with certain guaranty agencies to provide delinquency prevention and default aversion services for borrowers and potential borrowers of Federal Direct Loans.
• S 113 Know Before You Owe Private Student Loan Act: to require certain creditors to obtain certifications from institutions of higher education.
• HR 395 Student Loan Employment Benefits Act: to exclude from gross income amounts paid by an employer on an employee’s student loans.
• S 406 Students First Act: to provide for new program review requirements.
• S 114 Fairness for Struggling Students Act: treats privately issued student loans in bankruptcy the same as other types of private debt.
• HR 1330 Student Loan Fairness Act: to modify the dischargeability of debts for certain educational payments and loans.
• S 553 Veterinary Medicine Loan Repayment Program Enhancement Act: to amend the tax code to provide for an exclusion for assistance provided to participants in certain veterinary student loan repayment or forgiveness programs.
• HR 1125 Veterinary Medicine Loan Repayment Program Enhancement Act: to modify the dischargeability of debts for certain educational payments and loans.
• S 897 Bank on Student Loan Fairness Act: to prevent the doubling of the interest rate for Federal subsidized student loans for the 2013-2014 academic year by providing funds for such loans through the Federal Reserve System, to ensure that such loans are available at interest rates that are equivalent to the interest rates at which the Federal Government provides loans to banks through the discount window operated by the Federal Reserve System.
• S 682 Comprehensive Student Loan Protection Act: to reset interest rates for new student loans.
• HR 1946 Responsible Student Loan Solutions Act: to provide for student loan affordability.
• S 909 Responsible Student Loan Solutions Act: to provide for student loan affordability.
• HR 1527 Student Loan Interest Deduction Act: to increase the deduction allowed for student loan interest.