Warren Pushes “Fair Shot” for Borrowers

DC Shuttle …

GAO report and Senate committee hearing on student loan debt. The Senate Special Committee on Aging held a hearing titled “Indebted for Life: Older Americans and Student Loan Debt.” At the hearing, the Government Accountability Office (GAO) released a report that reveals student loan debt among seniors is on the rise. The report found that the amount owed by senior citizens has drastically increased, rising from $2.8 billion in 2005 to over $18 billion in 2013. The government can seize Social Security funds from seniors with delinquent loans, and agencies can impose fees on top of that, making it more difficult for seniors to pay back their debt. Also at the hearing, the Department of Education disclosed that under new contracts, it will provide more money to student loan service companies. The new structure is designed to give incentives for servicers to reduce loan delinquency and keep borrowers out of delinquency. Many held that under the previous system, these incentives were too low to encourage any real changes, but Sen. Elizabeth Warren (D-MA) argued that the new system gives such high bonuses that loan servicers will gain financially without actually changing policies to aid borrowers. William Leith, chief business officer for Federal Student Aid at the Education Department, said if the department doesn’t see “significant improvement” in moving borrowers out of delinquency within six to nine months, it will renegotiate the payment structures again.

Student loan bill may see Senate vote next week. Senate Majority Leader Harry Reid (D-NV) motioned to proceed to consideration of a bill that would allow student loan borrowers to refinance their loans at lower rates. To help pay for the adjustment, the bill would raise tax rates for those making over $1 million. The Bank on Students Emergency Loan Refinancing Act, sponsored by Sen. Warren was supported by democrats and a few republicans when it was introduced in June, but was filibustered. Before the August recess, Warren made it clear that it would be a priority when the Senate returned. “We will be voting on it again in September. As a country, we can either invest in tax loopholes for billionaires or lower-cost student loans for young people who are trying to build a future. Billionaires or students: It’s a pretty stark choice,” she said before the recess. The bill, part of the democratic “Fair Shot” agenda, is expected to be voted upon in the Senate next week. It is unclear whether Republicans will block the measure.

Joint House subcommittee hearing on Department of Education oversight. The Subcommittee on Higher Education and Workforce Training and the Subcommittee on Early Childhood, Elementary, and Secondary Education held a hearing to examine ways of improving oversight of the Department of Education. During the hearing, titled “Improving Department of Education Policies and Programs through Independent Oversight,” members heard recommendations from the GAO and the Department of Education Office of Inspector General on ways to improve department services while saving taxpayer dollars.

We publish the DC Shuttle each week featuring higher ed news from Washington collected by the New England Council, of which NEBHE is a member. This edition is drawn from the Higher Education Update in the Council’s Weekly Washington Report of Sept. 15, 2014.

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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