S. 897: Bank on Students Loan Fairness Act

Introduced:
May 08, 2013
Status:
Referred to Committee on May 08, 2013
Prognosis
0% chance of being enacted
See Instead:

H.R. 1979 (same title)
Referred to Committee — May 14, 2013

6/17/2013: In what could become an annual occurrence, Congress yet again faces a looming deadline to resolve the problem of student loan interest rates. Without Congressional action, the rate on ... (read more)

Track this bill

This bill was assigned to a congressional committee on May 8, 2013, which will consider it before possibly sending it on to the House or Senate as a whole.

Introduced
May 08, 2013
Reported by Committee
Passed Senate
Passed House
Signed by the President
 
Sponsor
Elizabeth Warren
Senior Senator from Massachusetts
Party
Democrat
Text
Read Text »
Last Updated
May 08, 2013
Length
4 pages
Related Bills
H.R. 1979 (identical)

Referred to Committee
Last Action: May 14, 2013

 
Full Title

A bill to prevent the doubling of the interest rate for Federal subsidized student loans for the 2013-2014 academic year by providing funds for such loans through the Federal Reserve System, to ensure that such loans are available at interest rates that are equivalent to the interest rates at which the Federal Government provides loans to banks through the discount window operated by the Federal Reserve System, and for other purposes.

Summary

No summaries available.

 
Prognosis

3% chance of getting past committee.
0% chance of being enacted.

Only 11% of bills made it past committee and only about 3% were enacted in 2011–2013. [show factors | methodology]

Cosponsors
11 cosponsors (10D, 1I) (show)
Committees

Senate Health, Education, Labor, and Pensions

The committee chair determines whether a bill will move past the committee stage.

 
Primary Source

THOMAS.gov (The Library of Congress)

GovTrack gets most information from THOMAS, which is updated generally one day after events occur. Activity since the last update may not be reflected here. Data comes via the congress project.

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Notes

S. stands for Senate bill.

A bill must be passed by both the House and Senate in identical form and then be signed by the president to become law.

The bill’s title was written by its sponsor.

GovTrack’s Bill Summary

6/17/2013: In what could become an annual occurrence, Congress yet again faces a looming deadline to resolve the problem of student loan interest rates. Without Congressional action, the rate on federally backed Stafford loans is set to double from 3.4 percent to 6.8 percent on July 1.

The Senate in early June failed to advance two bills meant to prevent this imminent increase in rates. A bill backed by Democrats would extend the current interest rate for two years, and offset the cost by ending three tax breaks. A GOP bill would peg all newly issued student loans to the U.S. Treasury 10-year borrowing rate plus 3 percentage points. Given the current Treasury rate of 1.75 percent, a student taking out a loan this coming school year would pay 4.75 percent for the life of the loan under this proposal. The Democrats’ bill garnered 51 votes, shy of the 60 needed to end debate, while the Republican proposal failed 40 to 57.

Meanwhile, the House in May passed a different Republican plan in a 221 to 198 vote, largely along party lines. This plan would permanently fix the problem by tying the student loan interest rate to the 10-year Treasury rate plus 2.5 percent. The bill would also reset the rate every year, though students could consolidate their loans into a fixed rate after graduation, and it would cap this rate at 8.5 percent.

The bills that have been voted on are among numerous measures put forward to deal with this political hot potato. House members have introduced bills to extend the 3.4 percent rate for another year (Rep. Hakeem Jeffries (D-NY)), two years (Reps. Joe Courtney (D-CT) and Louie Gohmert (R-TX)) or four years (Rep. Kyrsten Sinema (D-AZ)). Sen. Elizabeth Warren (D-MA) and Rep. John Tierney (D-MA) have proposed to key the student loan rate to the rate the Federal Reserve charges banks for very short-term loans, currently 0.75 percent.

Other lawmakers have tackled the interest rate issue as part of a broader reform of the federal student loan system. Thus, Rep. Tom Petri (R-WI) has filed a bill to calculate loan repayments based on the borrower’s salary, while also fixing the interest rate to the 10-year Treasury rate plus 3 percent. Rep. Karen Bass (D-CA) has introduced the Student Loan Fairness Act, which, among other things, would permanently cap the interest rate for all federal student loans at 3.4 percent.

The potential change in interest rates on subsidized student loans has its origins in a 2007 bill intended to boost college aid. In addition to increasing grant amounts to students and improving access to student loans, the College Cost Reduction and Access Act established a stepped reduction in interest rates. Beginning in July 2008, the rate was lowered over the course of four years from 6.8 percent to 3.4 percent, and was supposed to revert to 6.8 percent in July of last year.

Just two days before the July 1, 2012 deadline, Congress passed an extension of the 3.4 percent rate for another year. The temporary fix was adopted as part of a transportation spending bill that passed the House by a vote of 373 to 52 and the Senate 74 to 19. The $6 billion price tag associated with the extension was paid for by limiting students’ eligibility to subsidized loans to six years and changes in pension laws. A year has gone by, and now legislators are back at square one.

Last updated Jun 18, 2013. View all GovTrack summaries.

Library of Congress Summary

The summary below was written by the Congressional Research Service, which is a nonpartisan division of the Library of Congress.


5/8/2013--Introduced.
Bank on Students Loan Fairness Act - Amends title IV (Student Assistance) of the Higher Education Act of 1965 to direct the Board of Governors of the Federal Reserve System to provide the Secretary of Education, from the combined earnings of the Federal Reserve System, with the amount the Secretary determines to be reasonably necessary to award Direct Stafford Loans during the award year beginning July 1, 2013, to all eligible students attending participating institutions of higher education selected by the Secretary.
Prohibits appropriated funds from being used for Direct Stafford Loans made during that period.
Sets the interest rate on Direct Stafford Loans first disbursed on or after July 1, 2013, and before July 1, 2014, at the primary credit rate charged by the Federal Reserve banks on July 1, 2013.

House Republican Conference Summary

The summary below was written by the House Republican Conference, which is the caucus of Republicans in the House of Representatives.


No summary available.

House Democratic Caucus Summary

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