On Tuesday, administration officials announced a White House partnership with 10 colleges and universities to give students better information on the cost of higher education and financial aid options. The schools, which include the University of Massachusetts System, have voluntarily committed to adopting an information sheet for incoming students to help them understand the costs of college and their financial options, beginning with the 2013-14 school year. The information sheet will include the cost of one year at the school; financial aid options with loans and grants clearly delineated; likely monthly student loan payments after graduation; and student outcome statistics, including employment, graduation and loan default rates. This information sheet is based on the Financial Aid Shopping Sheet developed by the Consumer Financial Protection Bureau (CFPB) as part of their Know Before You Owe initiative.
In the continuing debate over scheduled rises in student loan interest rates, on Wednesday, Senators Tom Coburn (R-OK) and Richard Burr (R-NC) introduced legislation (S. 3266) to create a fixed-variable interest rate structure for new federal student loans disbursed after July 1. The interest rate would be 3% above the bond equivalent rate of 10-year Treasury bills at final auction. Currently, Stafford loan interest rates are scheduled to double from 3.4% to 6.8% on July 1, unless lawmakers can overcome disagreement over how to offset the cost of temporarily extending the current, lower rate. Senate Health, Education, Labor and Pensions (HELP) Committee Chair Tom Harkin (D-IA) rejected proposed offsets from Republican House and Senate leaders on Wednesday. House Speaker John Boehner (R-OH) and Senate Minority Leader Mitch McConnell (R-KY) sent their own proposal to the White House last week, suggesting two different ways to pay for a one-year extension of the current rate. One option would increase retirement contributions from federal employees through 2015. The second option would combine a reduction in the duration of in-school interest subsidies, scaling down the Medicaid healthcare provider tax threshold, and a measure to prevent Social Security overpayments at the state and local government levels. Most of the proposed offsets, which Sen. Harkin called “phony” and “not acceptable,” had been included in President Obama’s budget requests for FY2012 and 2013. Sen. Jack Reed (D-RI) joined Sen. Harkin at a press conference to argue that because the budget proposal was a package, it would be inappropriate to pick out these particular offsets for a different purpose. Republican lawmakers criticized President Obama for not engaging with their proposals even though it mirrored the administration’s budget requests.
In response, Senate Majority Leader Harry Reid (D-NV) released two new offset proposals late Thursday in a letter to Republican leadership. The first offset builds on a provision included in a Senate-passed surface transportation bill to create a wider “stabilization range” for employer pension liabilities to buffer employer pension contributions during a time of low interest rates. This would allow employers to invest more money in their businesses, resulting in an estimated $9.5 billion increase in tax revenue, according to Sen. Reid’s office. The second offset would save up to $8 billion by increasing employer premiums for Pension Benefit Guaranty Corp. (PBGC) insurance. Sen. Reid wrote that the two proposals taken together will “provide sufficient resources to fund both a one-year extension of the current student loan interest rate and reauthorization of the nation’s surface transportation programs.” In the event that “House Republicans are still not ready to pass the transportation jobs bill,” Sen. Reid urged that part of the offsets be used to pay for the student loan interest rate extension so that it can be passed before the July 1 deadline. A spokesperson for Sen. McConnell said that they are “encouraged” by Sen. Reid’s proposals, and “we may be making progress” toward a bipartisan solution. On the House side, over 100 Democrats led by Congressmen John Tierney (D-MA), Joe Courtney (D-CT), and George Miller (D-CA) sent a letter to Majority Leader Eric Cantor (R-VA) asking that he commit to allowing a vote on “responsible legislation” to prevent the interest rate increase. The House passed a bill (H.R. 4628) to extend current rates for one year in exchange for eliminating the Prevention and Public Health Fund.
As a member of New England Council, we publish the DC Shuttle each week featuring higher ed news from Washington. This edition is drawn from the Council’s Weekly Washington Report Higher Education Update, of June 11, 2012.
Founded in 1925, the New England Council is a nonpartisan alliance of businesses, academic and health institutions, and public and private organizations throughout New England formed to promote economic growth and a high quality of life in the New England region. The Council’s mission is to identify and support federal public policies and articulate the voice of its membership regionally and nationally on important issues facing New England. For more information, please visit: www.newenglandcouncil.com.