Tracking Federal Student Loan Proposals

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May 16, 2013 · by mlivolsi · Spark Notes

With the doubli

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ng of interest rates on Subsidized Stafford Loans set to occur on July 1, multiple bills have been introduced in the House and Senate to address the situation.  Between the White House, the House, and the Senate, there are multiple proposals from both parties to tie the interest rate on Stafford and PLUS loans to a market-based index.  In addition, multiple Democrats in the House and Senate have called for an extension of the current Subsidized Stafford rate of 3.4 percent, arguing Congress should take up major changes to the student loan programs via the reauthorization of the Higher Education Act.

Today, the House Education and the Workforce Committee is set to mark up its legislation to move to market-based interest rates, H.R. 1911.  We will be reporting on those deliberations, but in advance of the markup, we thought many COHEAO members would like a listing of current student loan legislation along with a matrix describing the different proposals to tie the interest rate on Stafford and PLUS loans to an index.

On the next page of this document, we have included a listing of student loan bills pending in Congress.  Below that, we have included a matrix of the various “market-based” proposals.

We are hopeful you find this be a useful resource.  As always, we welcome your feedback, particularly if we can format this document in a way to make it more useful.  We will continue to track this legislation, providing periodic updates via Sparks and/or the COHEAO website.

Federal Loan Interest Rate

Switch to Fixed, Variable Rate Solutions

Switch to Variable Rates with a Cap

Simple Stafford extensions of 3.4%

http://THOMAS.loc.gov/cgi-bin/bdquery/z?d113:SN00707:|/bss/|

  • S. 953, No Short Title, Sen. Jack Reed (D-RI), 2-yr extension paid for with tax code modifications (11 Democratic cosponsors, including Chairman Harkin)

Switch to Federal Discount Window Rate (1-Year)

Bankruptcy

Disclosures

School Certification and Enhanced Disclosures

Federal Loan Entrance and Exit Counseling

Refinance-Loan Forgiveness

Repayment-IBR/Automatic Withholding

Student Loans & Taxes

Employer Provided Benefits

  • H.R. 395, “Student Loan Employment Benefits Act of 2013,” Rep. Steve Israel (R-NY).  To amend the Internal Revenue Code of 1986 to exclude from gross income amounts paid by an employer on an employee's student loans. THOMAS bill summary and status:  http://thomas.loc.gov/cgi-bin/query/z?c113:H.R.395:

Student Loan Interest Deduction

Student Loans & Default Prevention/Default Rate Manipulation

Preferred Lender Lists

Click Here to see a chart of the proposed Market Based Solutions.

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