DC Shuttle: Parties Tangle Over Student Loan Rates as Deadline Nears

With a June 30 deadline quickly approaching, lawmakers are running out of time to prevent student loan rates from doubling. Leadership from both parties has said that a compromise will be coming before the deadline and suggested on Friday that they are close to a deal. In 2007, Congress approved PL 110-84, which gradually reduced loan interest rates over four years. but expires July 1. The issue that divides the two parties remains how to offset the $5.9 billion cost of the program, and Democrats and Republicans have turned down each others proposals for the last month. The House approved a one-year extension of the reduced loan rate in April (H.R. 4628) which offsets the cost by reducing funding for the preventative health care fund, but the Senate proposal (S.2343) was held up in May. Rep. John Tierney (D-MA) has proposed a bill (H.R. 4816) that would pay for the extension by closing a tax loophole for big oil companies, but it was rejected as an amendment on the House floor on Wednesday. A standing proposal by Sen. Harry Reid from June 7 to offset the costs by raising premiums that companies pay for pension insurance through the highway bill has met less resistance, but leadership in both parties have said they are waiting to see if the proposal has enough support to pass. President Obama told congressional leadership last week that it needed to be a priority. On Thursday, Obama gave a press briefing in the East Room encouraging students and parents to pressure Congress into action. If the legislation is not renewed, the interest rate on new federally subsidized student loans will jump from 3.4% to 6.8%.

On Tuesday, the Bill & Melinda Gates Foundation announced the recipients of $9 million in grant funding for “breakthrough learning models” in higher education. The grants included $1 million to the Massachusetts Institute of Technology to develop and offer a new, free prototype computer science course online, through edX, a joint venture between MIT and Harvard, and to partner with a postsecondary institution that targets low-income young adults to experiment with use of the course. A $3 million grant was given to MyCollege Foundation to establish a nonprofit college that is meant to blend adaptive online learning solutions with other student services.

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 25, 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.


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