Skip Ribbon Commands
Skip to main content

President to President

 Email  Share  Print
President to President
Molly Corbett Broad's weekly email newsletter to higher education leaders.

House Sends Student Loan Interest Rate Bill to President for Signature

July 29-Aug. 1, 2013 ~ Vol. 14, No. 25

  • House Sends Student Loan Interest Rate Bill to President
  • Higher Education Leaders Urge House to Pass Comprehensive Immigration Reform; Talking Points Now Available
  • ACE, Higher Education Groups Comment on Proposed National Student Loan Data System Revisions 
  • Senate Committee Approves Workforce Investment Act Reauthorization

Congress this week wrapped up work for the summer and leaves today on its traditional August break. The usual pre-recess flurry of activity ended early this time around, with just one major higher education bill—the student loan interest rate measure—sent to the president for his signature.

The student loan interest rate fix passed the House by a wide margin (392-31, with 10 abstentions) after originating in the Senate, which approved it 81-18 last week. The measure will tie interest rates on subsidized and unsubsidized undergraduate Stafford loans to the 10-year Treasury note rate, with an add-on of 2.05 percent. Rates on these loans would be set at the time the loan is taken out, fixed for the duration of the loan and capped at 8.25 percent. Stafford loans for graduate students (a totally new category of loans) will have a 3.6 percent add-on and a cap of 9.5 percent, and parental PLUS loans will have a 4.6 percent add-on and a 10.5 percent cap.

The new category of graduate student loans means that, for the first time, graduate students will pay a higher interest rate for the same loans as undergraduates.

The chart below shows what federal student loan interest rates were last year, what they were as of July 1, and how they will change under the measure passed this week.

Academic Year (2012-13)  Academic Year
2013-14 (current law)
Academic Year
2013-14
(House-passed bill)
Undergraduate Subsidized Stafford Loans  3.4% 6.8% 3.86%
Undergraduate Unsubsidized Stafford Loans*  6.8% 6.8% 3.86%
Graduate Stafford Loans    N/A N/A 5.41%
PLUS Loans 7.9% 7.9% 6.41%

*Graduate students are no longer eligible for these loans.

To see our communiqués to both the House and Senate on the bill, click here.

Meanwhile, we have spent the last two months drafting our recommendations for the upcoming reauthorization of the Higher Education Act. We will send those recommendations to the House Committee on Education and the Workforce later today, and I will share them with you early next week.

One issue we will be watching closely this fall is the fate of immigration reform in the House. This week, along with 12 other higher education association presidents, I wrote to House members to urge them to pass meaningful, comprehensive immigration reform legislation when lawmakers return in September.

As you'll remember, the Senate last month approved its historic immigration overhaul, the Border Security, Economic Opportunity, and Immigration Modernization Act of 2013 (S. 744). That measure contains a number of provisions strongly supported by the higher education community, including the DREAM Act for undocumented students.

Our letter to the House focused on three issues we would like to see addressed in any immigration legislation passed in that chamber: the DREAM Act, modernization of the green card process for advanced degree graduates, and modernization of non-immigrant visas.

We have had several requests from campus staff members about how to best approach immigration reform with members of Congress. For those of you interested in weighing in on the issue, the upcoming August recess would be a good time to make those contacts. We have developed a set of talking points that you may find helpful.

We sent comments this week to the Department of Education expressing concern that proposed revisions to the National Student Loan Data System (NSLDS) would expand the federal student financial aid database in ways that may not be appropriate, such as the collection of data on students who do not receive federal student aid.

While the proposed modifications dealing with the new student eligibility limitations for Direct Subsidized Loans are consistent with the intent of the NSLDS, other proposed changes exceed the boundaries of the law in ways that the courts have prohibited and that distort the purposes of NSLDS. We also are concerned that the department's notice and process fail to comply with important requirements of the federal Privacy Act.

To read the full notice of revisions, see the Federal Register.

Finally this week, the Senate Committee on Health, Education, Labor and Pensions Wednesday took a step toward renewing the Workforce Investment Act (WIA), the 15-year-old law that coordinates job-training and other vocational education programs.

Senator Tom Harkin (D-IA) worked with a bipartisan group of senators to push the bill through the committee, which approved it 18-3. The measure aims to better align the programs it authorizes without consolidating them, and would allow for increased funding for job-training programs. WIA programs have lost more than $1 billion in federal funding in recent years. The 1998 law has not been updated since its original passage.

Programs covered by the law include education and job-training vouchers, which can be used at community colleges, for-profit colleges, or community-based organizations.

The House passed a Republican version of the WIA reauthorization bill in March, consolidating several federally financed programs. Democrats opposed the bill, saying it would freeze the program's budget at $6 billion and hurt job access. It is not clear when the full Senate will consider the measure or what prospects for eventual passage may be.

Molly Corbett Broad
President of ACE