Student loan interest rates. On Thursday, the House Education and the Workforce Committee approved legislation (H.R. 1911) by a vote of 24-13 that would tie the interest rate on federal student loans to market rates. The interest rates on Stafford Loans are set to double on July 1 to 6.8%. The bill, the Smarter Solutions for Students Act, would set the interest rate at the 10-year Treasury note rate plus 2.5 percentage points for undergraduate loans and plus 4.5 percentage points for graduate loans. Those rates would be capped at 8.5% and 10.5%, respectively, and the interest rates would be calculated yearly. Republican supporters of the bill said that it would allow students to access low rates when they are available, while many Democrats argue that it would leave students susceptible to drastic rate increases. The committee rejected a substitute amendment by Joe Courtney (D-CT) that would have kept interest rates on subsidized loans at 3.4% for two years in order to find an alternate solution. The committee also rejected an amendment by John Tierney (D-MA) that would have tied federal student loan interest rates to the primary credit interest rate charged by Federal Reserve banks. The Senate may act on one of those proposals as early as this week, suggesting that the House and Senate may clash on the issue as they have in recent years. On Tuesday, Sens. Jack Reed (D-RI), Tom Harkin (D-IA) and Majority Leader Harry Reid (D-NV) introduced legislation, the Student Loan Affordability Act (S. 953), that would freeze rates at current levels for two years, paid for by closing tax loopholes. The bill would limit the use of tax-deferred retirement accounts as an estate planning tool, close a corporate offshore tax loophole by restricting “earnings stripping” by expatriated entities and close an oil and gas industry tax loophole by treating oil from tar sands the same as other petroleum products.
GAO study on higher ed regs. On Friday, the Government Accountability Office (GAO) released a study showing that experts say federal regulations for higher education are too burdensome. The GAO held meetings with education experts, trade association representatives, researchers and school officials who said that education regulations were “costly, vague, complicated or unnecessary.” One of the greatest concerns was the difficulty in calculating how much federal assistance money should be returned to the Department of Education when a student drops out of school early. Respondents also cited disclosure requirements for student enrollment, graduation rates, cost of attendance and student crime.
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 May 20, 2013.
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.