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bill Progress


  • Not enacted
    The President has not signed this bill
  • The house has not voted
  • The senate has not voted
    IntroducedJune 27th, 2013

What is it?

S. 1238 would expand the low interest rate for some student loans to more students by amending Title IV of the Higher Education Act.

The loans in question are Direct Stafford loans, which are currently being offered to students with a 3.4 percent interest rate. But this rate has so far only been applied to students who received loans between July 1st, 2011 and July 1st, 2013. If passed, this bill would extend the low interest rate to undergraduates who received loans between July 1st, 2011 and July 1st, 2014.


This bill also has a provision that has nothing to do with education. If S. 1238 is enacted, it would change the requirements for how much money an employee with a tax-exempt pension plan has to give back to the state if that employee has died. This amendment is aimed at making sure the beneficiaries of the deceased employee — their spouse or a disabled/chronically-ill dependent — don’t get locked into a burdensome annuity contract with an insurance company.

Impact

Current and prospective college students, their parents and guardians, institutions of higher education, insurance companies, banks, Direct Stafford Loans, the Higher Education Act, the Internal Revenue Code, spouses and dependents of employees with tax-exempt pensions.

Cost

$22.00 Billion
A CBO cost estimate is unavailable. However, a Bloomberg article on the bill cites an estimated cost of $22 billion over 10 years as reported by Senate aides.

More Information

Of Note:

Last year Congress voted to slash the interest rate on student loans from 6.8 percent to 3.4 percent — a significant reprieve for millions of college-bound youth. Supporters of this bill argue that this represents an overdue concession to college students, who last year contributed $51 billion in profits to the federal government through their loans.


Opponents of this bill argue that it hinges almost entirely on increasing taxes on the wealthy. An alternative bill was introduced around the same time as S.1238 that would allow loan rates to fall for several years before they’re allowed to climb again without a cap.


One fact few people dispute is that student debt, a product of loans, is on the rise. Today there are almost 20 percent more young adults with student debt than there were 10 years ago, with a hefty increase in debt size.


Media:

Co-Sponsoring Sen. Jack Reed (D-RI) Press Release

Bloomberg (Cost Estimate)


Politico


Business Week


Committee on Education and the Workforce Democrats

(Photo Credit: Flickr user Poster Boy NYC)

AKA

Keep Student Loans Affordable Act of 2013

Official Title

A bill to amend the Higher Education Act of 1965 to extend the current reduced interest rate for undergraduate Federal Direct Stafford Loans for 1 year, to modify required distribution rules for pension plans, and for other purposes.

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