Skip Ribbon Commands
Skip to main content

 Email  Share  Print

THURSDAY BUZZ: Competing Student Loan Interest Rate Bills Emerge as Obama Pushes Issue on Campus Tour

April 26, 2012

 

​The impending increase in student loan interest rates rose to the top of the news cycle this week as President Obama discussed the issue at events on campuses in North Carolina, Colorado and Iowa.

The interest rate on new subsidized Stafford loans to undergraduate students is scheduled to double, from 3.4 percent to 6.8 percent, on July 1 unless Congress intervenes.

Both the Senate and House moved quickly to respond to the new spotlight on the increase, introducing bills—two in each chamber, sponsored by each party—that would keep the rate at 3.4 percent for one year. The primary difference in the four measures is how they would pay for the freeze.

Senate Democrats would offset the estimated $6 billion cost by eliminating a tax provision that allows some small businesses, classified as S corporations, to avoid certain payroll taxes. House Democrats offered a bill that would pay for the freeze by cutting subsidies to oil companies. Republicans in both chambers responded with measures that cut a fund included in the Affordable Care Act that helps prevent chronic diseases to offset the cost of their bills.

The lower rate stems from the 2007 College Cost Reduction and Access Act, which reduced the interest rate on subsidized Stafford loans over five years, from 6.8 percent to 3.4 percent. The estimated cost of $6.2 billion from 2007 to 2012 was paid for through changes to the terms of loans issued under the now-eliminated Federal Family Education Loan program.

For more on the rate increase and the response to it, see the following stories:

President and Parties Focus on Proposals to Keep Student-Loan Interest Low
The Chronicle of Higher Education

Two Parties Find a Way to Agree, and Disagree, on Student Loan Rates
The New York Times

Congressional Battle Brewing on How to Pay for Student Loan Rate Cut
The Washington Post
(free reg. req.)

UNC Students Drawn to Obama’s Student Loan Debt Story
D
iverse: Issues In Higher Education

Obama Presses on College Costs as Romney Vies for Youth Vote
Bloomberg

Loan Interest Rates: How Obama And Romney Are Both Wrong
The Huffington Post

OPINION: Subsidize Students, Not Tax Cuts
The New York Times

Other ACE News

  • March 2, 2015

    HEADLINES: Today's Top Higher Education News

    In today’s headlines, The Chronicle of Higher Education explores how small colleges are adapting in the aftermath of the recession, and Diverse: Issues in Higher Education covers a report finding that nearly 22 percent of the nation’s community...

  • ACE Annual Meeting 2015

    March 2, 2015

    ACE Annual Meeting to Feature Federal Relations Updates

    ​ACE's 97th Annual Meeting will provide valuable opportunities to obtain insight into what higher education leaders can expect from federal policymakers in the coming year.

  • Campus Internationalization

    March 2, 2015

    12th Cohort of Internationalization Laboratory Shares Steps Forward

    ​Members of the 12th Cohort of ACE’s Internationalization Laboratory joined in a robust discussion Friday, Feb. 13 in Washington during the mid-year seminar to explore several campus internationalization issues, with creating campus-wide buy in and...

  • Institutional Capacity

    March 2, 2015

    ACE Institute for New Chief Academic Officers Is Accepting Applications

    ACE is now accepting applications to its 2015 Institute for New Chief Academic Officers, which will meet in three sessions throughout the year.

  • Tax Policy

    March 2, 2015

    ACE, Higher Education Groups Support Schumer Tax Credit Bill

    ACE and 11 other higher education associations sent a letter Feb. 27 to Sen. Charles Schumer (D-NY) in support of his recently introduced bill to make a number of important reforms to the American Opportunity Tax Credit and Lifetime Learning Credit.