Student Loan Interest Rates
Last week, the Senate passed its student loan interest rate compromise bill by an 81-18 vote. As previously noted, this proposal would peg interest rates to the 10-year Treasury note, plus 2.05 percent for both the subsidized and unsubsidized portions of the undergraduate loans, plus 3.6 percent for graduate loans, and plus 4.6 percent for PLUS loans. Those rates would be capped at 8.25 percent, 9.5 percent, and 10.5 percent, respectively. Two amendments were considered on the floor by Democratic lawmakers unhappy with the agreement, including an amendment by Sens. Jack Reed (D-RI) and Elizabeth Warren (D-MA) to cap rates for undergraduates and graduate loans at 6.8 percent and rates for PLUS loans at 7.9 percent, which would be paid for by a surcharge on people making more than $1 million. Another amendment by Sen. Bernie Sanders (I-VT) would have limited the bill to two years to avert the predicted market rate increases after two years. Those amendments ultimately were not included in the final bill. Those and several other senators noted they would take the issue up again as Congress considers reauthorization of the Higher Education Act this fall.
We expect the House to pass the bill early this week, possibly under extension of the rules, which will then be signed swiftly by President Obama in advance of students signing their promissory notes in August.
Comments on Higher Education Act Reauthorization
The deadline to submit comments to the House Education and the Workforce Committee on the Higher Education Act reauthorization is this Friday, August 2.
The House Education and the Workforce Committee marked up the Supporting Academic Freedom through Regulatory Relief Act (H.R. 2637) last Wednesday, July 24, which would repeal three of the Department of Education’s (DOE) “program integrity” regulations: the gainful employment, state authorization, and federal credit hour regulations. Additionally, the bill includes a provision to prohibit DOE from issuing additional regulations on such matters until after Congress reauthorizes the Higher Education Act, which appears to be aimed primarily at the department’s renewed effort to pursue regulations on gainful employment. DOE announced in June its intentions to establish a negotiated rulemaking committee to prepare regulations on gainful employment this fall. While the bill could be considered on the House floor before the August recess, it is unlikely to be taken up in the Senate.
This Week’s Hearings:
- Wednesday, July 31: The Senate Health, Education, Labor and Pensions Committee will hold a hearing to mark up the Workforce Investment Act of 2013 (S. 1356). The newly-introduced measure has bipartisan support and is likely to be favorably reported out of committee. However, it is unknown at this point whether lawmakers will successfully reconcile the measure with a very different, more partisan House-passed bill (H.R. 803).
Executive Branch Activity
Student Loan Rulemaking
Today, Monday, July 29, DOE plans to publish a Notice of Proposed Rulemaking (NPRM) related to student loan programs in the Federal Register. The NPRM would amend the Student Assistance General Provisions, Federal Perkins Loan (Perkins Loan) Program, Federal Family Education Loan (FFEL) Program, and William D. Ford Federal Direct Loan (Direct Loan) Program regulations. Some of the proposed changes result from the Health Care and Education Reconciliation Act of 2010, while others are general updates and clarifications aimed at operating Title IV student aid programs more efficiently. Comments will be due 30 days after the NPRM is published in the Federal Register, on or around August 29.