Here are the best articles from around the web this week talking about student loans…
For the week ending Friday July 19, 2013
Student Loan News:
1. Senators Reach Deal on Student Loans:
Senators are ready to offer students a better deal on their college loans this fall, but future classes could see higher interest rates.
The Senate could vote as early as Thursday on a bipartisan compromise that heads off a costly increase for returning students. The compromise could be a good deal for students through the 2015 academic year, but then interest rates are expected to climb above where they were when students left campus this spring. Official Site: http://abcnews.go.com/Politics/wireStory/ap-sources-senators-reach-deal-student-loans-19694747#.Ueef6tI3Cgs
2. Federal student loan debt tops $1 trillion:
Federal student loan debt has topped $1 trillion, the Consumer Financial Protection Bureau will announce Wednesday, a milestone that will only intensify the debate in Congress over what to do about student loan interest rates.
The interest rate on new, federally subsidized Stafford loans doubled on July 1 to 6.8 percent thanks to congressional inaction, and the two parties haven’t been able to agree to a solution to lower the rate. Read more: http://www.politico.com/story/2013/07/student-loan-debt-tops-1-trillion-94316.html
3. Warren – Profits from student loans are ‘obscene’:
Speaking to young activists on Wednesday, Sen. Elizabeth Warren (D-Mass), didn't mince words when describing the money the government makes off student loans.
“The federal government will make $51 billion in profits off student loans,” she said at Generation Progress’s Make Progress National Summit . “That’s more than wrong. It’s obscene.” More details: http://www.washingtonpost.com/blogs/post-politics/wp/2013/07/17/warren-profits-from-student-loans-are-obscene/
Student Loan Blog Posts:
1. Student Loan Fix Stalled By Divided Senate Democrats:
On the eve of a major vote that would help some 7 million college students pay a lower interest rate on their new loans, Senate Democrats have failed to coalesce around a single proposal.
On July 1, interest rates on federally subsidized Stafford loans doubled to 6.8 percent because of the expiration of a 2007 law that gradually lowered that rate. Wednesday's procedural vote on a plan introduced by Sens. Jack Reed (D-R.I.) and Kay Hagan (D-N.C.), which would extend the 3.4 percent rate on those loans for another year, is likely to fail. It would pay for the one-year extension by closing a tax loophole that benefits those with inherited retirement accounts, a nod to Republicans who have called for a revenue-neutral solution while accusing Democrats of kicking the can down the road. Details here: http://www.huffingtonpost.com/2013/07/09/student-loan-fix-senate_n_3569882.html
2. What the Student Loan Rate Debate Means for You:
Up until this point, subsidized Stafford loans were capped at a 3.4% interest rate. This meant that any student signing up for a new loan under the program would be guaranteed a lower interest rate than they would otherwise pay if they were financing their education through a private institution. Stafford loans are also backed by the full faith of the US government, which means if a student defaults on their loan, the lender still gets paid (which is what allows such a low interest rate to begin with).
It's worth pointing out, this only applies to subsidized loans under the federal Stafford loan program. Other federal loan programs, as well as private lending, are unaffected. The current 3.4% interest rate was first instituted in 2007. Prior to that point, 6.8% was the old cap. Click here: http://lifehacker.com/what-the-student-loan-rate-debate-means-for-you-745986720
3. Senate Rejects Democrats’ Student Loan Plan:
Senate lawmakers defeated a Democratic plan to lower interest rates on some federal student loans, a move that could ease the chamber toward an eventual compromise to resolve the impasse over loan rates.
The bill would have returned interest rates on certain new federal student loans back to 3.4%, the rate they were at last week before doubling to 6.8%. According to White House estimates, 7 million students or roughly one third of all undergraduate students will take out these loans in the coming academic year. Existing loans won’t be affected. Click here: http://blogs.wsj.com/washwire/2013/07/10/senate-rejects-democrats-student-loan-plan/