Student Loan Interest Rates

Posted on May 8, 2012October 17, 2012

The Senate will take up a measure today that would prevent subsidized student loan interest rates from doubling this July. While both parties agree that they want to stop the rate hike from going forward, Senate republican leadership indicated Monday that they will likely filibuster the democratic measure because it opposes the proposed offset. Senate democrats need 60 votes to move forward with their bill. Democrats, who control 53 votes in the Senate, would need at least seven republicans to vote with them to overcome a filibuster and begin debate on the bill. House republicans have already passed a different version.

The democratic legislation would cover the $6 billion cost of preventing the interest rate increase by eliminating a corporate tax loophole that allows the wealthy to pay less in Social Security and Medicare taxes. Republicans prefer a measure similar to the House-passed bill, which would offset the cost of the interest rate cut by eliminating a fund in the 2010 health care overhaul that covers prevention and public health.

President Obama has made a campaign issue out of the bill because interest rates on Stafford loans will jump to 6.8 percent from 3.4 percent if Congress doesn’t act by July 1^st.

UPDATE: The Senate just voted to blocked the bill to prevent doubling of the student loan rates. Stay tuned…

This Week in Congress

Posted on May 7, 2012October 17, 2012

Congress returns to work today after a week-long recess period. The Senate convenes at 2:00pm and continues debate of the student loan interest rate bill. The House is also in at 2:00pmwith votes expected around 6:30pm.

This afternoon, the House Budget Committee will mark up two bills: The Sequester Replacement Act of 2012 (HR 4966) and The Sequester Replacement Reconciliation Act of 2012. Both measures aim to replace sequestration, the mandatory cuts scheduled to begin in January 2013. The first bill would stop sequestration from happening, while the second would outline a series of cuts to entitlement programs such as health care and food stamps that would replace the cuts to discretionary spending expected through sequestration. The full House is due to pass the package late in the week likely along partisan lines. However, the safe bet is Congress won’t reach agreement on how to deal with spending priorities until after the elections.

Meanwhile, on Tuesday the Senate is scheduled to debate a bill to keep interest rates on federally subsidized student loans at 3.4 percent for one more year, instead of increasing to the previous amount of 6.8 percent. The House passed a similar bill a week ago, but the two chambers differ on how to pay for the extension. In a sign of their desire to downplay the partisan tensions, Senate Republicans are expected to help Democrats reach the 60 votes needed to overcome a procedural hurdle to bringing the measure to the floor.

Tuesday also marks the formal launch of a House-Senate conference to write a surface transportation reauthorization bill. If conferees can’t come to an agreement on the bill before the November election, then chances are good the bill just won’t get done this year. And that will mean starting over from scratch early in 2013. The biggest hurdles include the length of reauthorization, policy riders approving the Keystone XL pipeline and blocking EPA’s authority to regulate coal ash, and how best to pay for the cost of highway and transit programs around the country. This bill reauthorizes the University Transportation Centers; the UW operates one of these centers for USDOT Region 10.

Also this week, the full House is scheduled to debate the FY 2013 Commerce-Justice-Science spending bill, which includes funding for NOAA and the Office of Science and Technology Policy. House Rules Committee meets at 5:00pm today to write the spending bill’s rule, and it will hit the floor sometime later in the week. This will be the first FY 2013 appropriations bill to be approved in the House, but differences over spending levels make it likely that both chambers won’t agree on most or even all of its spending bills until after the elections. But by sending the measures through committee and to the floor in each chamber, leaders are at least offering a starting place for those year-end negotiations. Congress has missed the statutory September 30^th appropriations deadline for more than a decade, instead relying on continuing resolutions to keep the government from shutting down until the final bills are cleared and signed by the President.

Student Loan Interest Rates

Posted on April 23, 2012October 17, 2012

President Obama used his weekly address to call on Congress to prevent student interest rates from doubling in July. He believes that we should be doing everything we can to put higher education within reach for every American because “at a time when the unemployment rate for Americans with at least a college degree is about half the national average, it’s never been more important.” Obama is calling on Congress to act before student loan interest rates double for more than 7.4 million students, adding an average of $1,000 to their debt. Congress has a chance to take action on what should be an area of bipartisan agreement to prevent this unnecessary and damaging increase in interest rates. Watch the President’s address here.

Ryan Budget Proposes Deeper Cuts to Student Financial Aid

Posted on March 26, 2012October 17, 2012

Last week, Rep. Paul Ryan (WI), unveiled his FY2013 budget resolution calling for an overhaul to the tax code and deeper reductions in spending. Among Ryan’s proposals was limiting the growth of federal financial aid for college students, focusing it on low-income students. More specifically, Rep. Ryan proposes a budget that:

Eliminates the in-school interest subsidies for undergraduate students
Eliminates the student aid eligibility expansions enacted by the College Cost Reduction and Access Act (CCRAA), including auto-zero eligibility and Income Protection Allowance
Proposes an undefined a maximum income cap for Pell Grant eligibility
Eliminates Pell Grant eligibility for less-than-half-time students
Eliminates the automatic increases in the maximum Pell award above $5,550
Eliminates the mandatory funding for Pell Grants
Eliminates Pell and Campus-Based Aid Administration Cost Allowances (ACA)
Repeals the mandatory funding for College Access Challenge Grants ($150 million in FY 2013). Again, since there is no corresponding increase in the discretionary side, in effect this either cuts this program or will result in $150 million in additional cuts in FY 2013 to all other discretionary education programs.
Allows interest rates on subsidized Stafford loans to double on July 1 from 3.4% to 6.8%

While this budget resolution is not expected to be adopted in full in the House or the Senate, some of these proposals may be used to shape the debate over the budget and deficit reduction in the coming months and will be a topic that we will be keeping a close eye on.

FY13 Budget Supports Research, Student Aid

Posted on February 17, 2012October 17, 2012

The Obama Administration’s FY13 budget, released on February 13, reflects a continuing commitment to increased federal investments in research and education. The budget would increase funding for the National Science Foundation (NSF); the Department of Energy’s (DOE) Office of Science and ARPA-E; and the Agriculture and Food Research Initiative (AFRI) in the Department of Agriculture, which supports competitive research. It also would provide a modest funding increase for the National Endowment for the Humanities (NEH). Similarly, funding for basic research at the Department of Defense (DOD) is essentially level despite significant cuts elsewhere in the agency.

Funding for the National Institutes of Health (NIH) would be essentially frozen at the FY12 level. The science portfolio at NASA would be cut by more than three percent.

For student aid, the Administration would fully fund the maximum Pell Grant level of $5,635 and extend the 3.4 percent interest rate on subsidized Stafford loans, which otherwise would rise to 6.8 percent on July 1, 2012. Additionally, the Administration would shift campus-based aid programs, such as Perkins Loans, toward institutions that “keep their tuition and tuition increases low,” enroll relatively high numbers of Pell-eligible students, and provide “good value.” No additional details are available on exactly how the Administration would implement this.

The FY13 budget also contains several tax proposals of interest to research universities. These include making the American Opportunity Tax Credit permanent and limiting the value of certain tax expenditures, including the deduction for charitable contributions for individual taxpayers, to 28 percent. The budget would also expand the Build America Bonds program by making the program permanent, expanding eligibility to both government entities and nonprofit institutions—including both public and private universities—and expanding the allowed uses of the bonds.