House passes student loan interest bill

[deadparrot]

WASHINGTON - The Democratic-controlled House voted overwhelmingly to cut interest rates on need-based student loans Wednesday, steadily whittling its list of early legislative priorities.

The legislation, passed 356-71, would slice rates on the subsidized loans from 6.8 percent to 3.4 percent in stages over five years at a cost to taxpayers of $6 billion. About 5.5 million students get the loans each year.

Though clearly popular, the legislation sparked a debate over where to set the nation's education priorities — helping college graduates pay off their debts or expanding federal grants for low-income students.

Democrats conceded Congress needs to do more to make college more affordable. But they said reducing student loan rates was a significant step toward tuition relief.

http://news.yahoo.com/s/ap/20070118/ap_on_go_co/congress_rdp

[Selatius]

1. At the end of the day, we should do what France and Germany have done.

Of course, the standards for entry into university there are harder to attain, but if you can meet entry level requirements for university, you are subsidized through college by taxpayer dollars and don't go into debt. For students who fail to meet entry level qualifications or don't want to attend university, they are given access to vocational education training as an alternative. We are far behind Western Europe in terms of education standards.

[Drops_not_Dope]

2. What a difference

a day makes. Maybe we finally got those evil doers out of Congress.

[onehandle]

3. How about capping interest for Banks?

Under the GOP, top rates are insane. Read the fine print on your credit card agreement. Many card shoot up to 30 or more percent if you miss a payment.

Legal loan sharking.

[BayCityProgressive]

4. SO funny

The media used to harp constantly about the Dems being divided when 5-6 members crossed the isle. On this 100 hours blitz half the party has sided with us...yet no mention in the MSM of a divided GOP with no plan...

[Doodlesweaver]

5. Excellent point, onehandle

This might help a lot of people get out of debt.

[Demeter]

6. House votes to halve student-loan interest rates --Yahoo

http://news.yahoo.com/s/nm/20070117/ts_nm/usa_congress_democrats_dc

By Thomas Ferraro and Kevin Drawbaugh
Wed Jan 17, 6:51 PM ET



WASHINGTON (Reuters) - The new Democratic-led U.S House of Representatives kept another campaign promise on Wednesday and voted to help needy students cover the soaring cost of college. On a 356-71 vote, the House set aside objections by President George W. Bush's administration as well as concerns by lenders and passed a bill to cut in half the interest rate on need-based federal student loans over five years to 3.4 percent.

The White House said in a statement it is committed to making college more affordable, noting that during the past six years federal student aid has risen by 57 percent. But it opposed the bill, warning that reducing the interest rate could fuel more tuition increases. The administration instead favored increasing federal grants to low-income students, which do not have to be repaid.

Student loan processing firms -- such as Sallie Mae, Nelnet Inc. and the Student Loan Corp. unit of financial giant Citigroup -- are concerned the rate-cut bill will be the first of a number of measures that end up reducing their profits...For example, they fear promotion of direct loans to students that bypass private lenders.

While the rate reduction would initially be for just five years, Democrats said they plan to make it permanent and also raise maximum levels for certain federal grants...Backers estimated the House bill, once fully phased in, would save the typical borrower of $13,800 in need-based federal student loans about $4,400 in interest.

The rate-cut price tag for five years has been estimated at nearly $6 billion. Backers contend it could be covered by a mix of fee hikes and subsidies cuts affecting large lenders.

[Aviation Pro]

9. Ahem...

rate-cut bill will be the first of a number of measures that end up reducing their profits...For example, they fear promotion of direct loans to students that bypass private lenders

Two words: Fuck and them.

[Marie26]

20. I don't see how any

legislator can seriously oppose this. We know the real reason Republicans oppose this - big contributions from bank lobbies. But how could they possibly sell this vote to their constituents?

[hippiechick]

10. I hope this applies to ones we're already paying on, too !

:) I - and alot of others similarly screwed by the Bush economy - could use a little bit of a break ...

[ClintonTyree]

11. I was wondering if it's retroactive.....

my daughter has about $20,000 in student loans right now. She graduated in May. She's paying a little over 6% interest. This would save her about $5,000 or so. I THOUGHT we had her interest rate locked in at 3%. We had all the paper work in on time and completed but for SOME MYSTERIOUS REASON :eyes: they said she wasn't eligible. :wtf:

Anyway, I'm surely going to look into the nuts and bolts of this and hopefully we can lock in the interest rate she should have had in the first place. Rotten bastards! :grr:

[whistle]

7. When were student university loans jacked up to 6% to 7% plus?

...Was that another rethuglican supply-side economics move to reduce the number of people who could afford to go to college?

<snip>
Student loan interest rates rise to 7%
St. Louis Business Journal - July 3, 2006

Missouri college students had to pay $2,106 to $2,535 more annually in college loans beginning July 1, according to a report released Friday by the research arm of the Campaign for America's Future.

Interest rates on Stafford loans, the basic student loan, rose from 5.3 percent to 7.14 percent on old loans and to 6.8 percent on new loans.

Parents that took out PLUS loans to help their children pay for an undergraduate education also face rising interest rates. Rates on PLUS loans increased from 6.1 percent to nearly 8 percent for existing loans and to 8.5 percent on new loans, costing the average parent nationally an extra $3,000 and $3,953 respectively.

Tuition at the average four-year public university has increased by 40 percent since 2001, and nearly two-thirds of all four-year college graduates now have student loans, according to the report.

<snip>
Federal student loan interest rates to rise nearly 2 full percentage points this summer

One month remains for college students and graduates to lock in today’s low interest rates through student loan consolidationRESTON, Va., May 30, 2006—Student loan interest rates will climb 1.84 percentage points this summer—one of the largest increases in the history of the federally guaranteed student loan program. Students, graduates and parents who have student loans can avoid the rate hike if they apply to consolidate their student loans by June 30.
“Student loan consolidation is the best way to protect yourself from a very significant interest rate increase on July 1,” said Keith D’Ambra, senior vice president of loan consolidation for Sallie Mae, the nation’s leading provider of education funding and largest consolidator of student loans. “Time is money, and waiting too long to consolidate your student loans will cost you for many years into the future.”

Following are the interest rates that will go into effect on July 1, 2006 for Federal Stafford and PLUS Loans first issued on or after July 1, 1998 and on or before June 30, 2006:

Stafford Loans (in school, grace and deferment periods): 6.54 percent
Stafford Loans (repayment): 7.14 percent
PLUS Loans: 7.94 percent

By law, interest rates on existing Federal Stafford and PLUS Loans are variable and reset annually on July 1 based on the 91-day Treasury-bill yield from the last auction in May, plus a margin of interest set by federal law. For loans issued after July 1, 1998 and before July 1, 2006, Stafford Loans are capped at 8.25 percent and PLUS Loans may not exceed 9 percent.
<MORE>

http://www.salliemae.com/about/news_info/newsreleases/053006.htm

So what do the rethuglican fascists at the Heritage Foundation say about this?

<snip>
A Better Proposal

Rather than providing billions in new federal subsidies, Congress should instead focus on the fundamental problem of college affordability: out-of-control higher education costs. Congress should determine whether ever-increasing federal subsidies for higher education contribute to increasing college costs.

Conclusion
America's economic future depends on having an educated and productive workforce. The federal government has already invested unprecedented sums on financial aid for college students and created a system that provides large amounts of aid at low interest rates. Halving student loan interest rates will subsidize college graduates repaying their aid, without significantly improving current and future students' access to higher education. Importantly, halving student loan interest rates will not address the ever-increasing cost of higher education. Congress should instead examine whether federal subsidies are a part of this problem.

Brian M. Riedl is Grover M. Hermann Fellow in Federal Budgetary Affairs in the Thomas A. Roe Institute for Economic Policy Studies at The Heritage Foundation.
<MORE>
http://www.heritage.org/Research/Education/wm1308.cfm

They can go f**k themselves!

[ClintonTyree]

12. It'scriminal, isn't it?

What are banks paying for interest on savings accounts now? 5%, if you're extremely lucky. These bastards are getting rich ripping off college students and their families and the Bush administration is letting them get away with it. Once again, Bush takes care of the rich and the middle class gets it up the....... :mad:

[jsamuel]

8. just so everyone knows, it will be reduced gradually over the next 5 years

it will be 3.4% in 2011

It applies to subsidized loans only (to be expected, that is the definition of subsidized).

So, if you are already paying high rates, this bill is not going to help you unless you consolidate later.


http://www.house.gov/ed_workforce/micro/studentloans.shtml


The College Student Relief Act of 2007 Will...

...cut interest rates in half for undergraduate students with subsidized student loans -- those most in financial need -- over the next five years at no new cost to taxpayers. The plan will begin by cutting interest rates to 6.12% on July 1, 2007, and will continue to decrease rates until they reach 3.4% in 2011.

Cutting Interest Rates in Half: Phase-In Schedule
*All interest rate changes will take place in July 1 of each year
2007 2008 2009 2010 2011
6.12 5.44 4.76 4.08 3.40


The College Student Relief Act of 2007 Will Meet All Pay-Go Rules By...

...increasing efficiency in the student loan programs and redirecting all savings directly back into the hands of students.

Collectively, the offsets below will pay for the entire cost of cutting interest rates in half.

Five of the six offsets below have been proposed in the President's Budget, or were already debated and passed in the House or Senate Committees during Budget Reconciliation last year, but were not enacted into law.

Offsets include:

1. Decrease lender Special Allowance Payment (SAP) rate by 0.1 percentage point. This provision exempts the lowest 10% of cumulative volume in the student loan market. The bill protects 99% of the banks in the program.
2. Lower lender insurance rates for private lenders to 95%.
3. Eliminate "Exceptional Performer" Lender Status.
4. Increase lender origination fees to 1%.
5. Lower guaranty agency collection fees to 20% next year and to 16% by 2010.
6. Increase the annual fee to 1.30% on consolidation loans. This provision only applies to banks with 90% or more of their holdings in consolidation loans.

[DFLer4edu]

14. This is the problem with the bill

The bill should instantly cut the rates. College students can't wait 5 years for the rates to go down, they'll be out of college! If we can't afford to help send kids to college what can we do?

[jsamuel]

15. plus when the 5 year wait is over, the 3.4% only lasts for 6 months

then it is 6.8 again

[Judi Lynn]

13. House Votes to Reduce Rates on Student Loans

House Votes to Reduce Rates on Student Loans
Cut in Lender Subsidies Offsets Impact

By Paul Kane
Washingtonpost.com Staff Writer
Thursday, January 18, 2007; A03

The House overwhelmingly approved a bill yesterday that is designed to cut interest rates on college loans, creating a plan that potentially could save students $2,300 over the course of a loan. But the reduction in rates would be phased in and would not take full effect until 2011, when the legislation would automatically expire unless renewed by Congress.

By a vote of 356 to 71, House Democrats checked off another priority item from their fall campaign as part of a 100-hour march to pass legislative priorities by the close of business this week.

However, even the staunchest supporters of the provision -- which would drop the rate paid on federally subsidized student loans from 6.8 percent to 3.4 percent over five years -- acknowledged that the action was only a small piece of what House Democrats hope to do to reduce the cost of higher education.

"This is a down payment," said Rep. George Miller (D-Calif.), chairman of the House Education and Labor Committee.

The Democrats broke into loud applause when the final gavel came down on the vote, the fifth of their "Six for '06" agenda items to pass since the party took over the chamber earlier this month.
(snip/...)

http://www.washingtonpost.com/wp-dyn/content/article/2007/01/17/AR2007011701602.html?nav=rss_email/components

[ckramer]

16. This action is nice but trivial...why

Because Congress should think about how to help young people avoid debts for essential higer education in the first place. It's absurd to put so much burden on the younger generations for the sake of corporation profits.

That's the task for democrats in power.

This country is insane.

[Marie26]

17. Is this retroactive?

I mean will it apply to graduates who still have outstanding student loans? Also, does it apply to graduate school loans?

[jsamuel]

18. from what I have read, no and no

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=102x2693398#2694061

However, they simply didn't say anything about graduates. I assume that means only undergraduates.

[Marie26]

19. Darnit!

Thanks for the info.

[UrbScotty]

21. Veto-proof!! (nt)