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Just a few hours ago, Senators Reed (D-RI), Harkin (D-IA), Reid (D-NV), and Murray (D-WA) unveiled a bill called the Student Loan Affordability Act, which will keep student loan interest rates low -- at the current 3.4 percent -- for the next two years.

Rather than doom students with proposals that have long-term consequences, Senators Reed, Harkin, Reid, and Murray have come through with finding a solution that will benefit students in both the short and long term.

In an effort to protect taxpayers and shield college students from a sharp increase in federal Stafford loan interest rates, U.S. Senators Tom Harkin (D-IA), who chairs the Senate Health, Education, Labor, and Pensions (HELP) Committee, and Jack Reed (D-RI), along with Majority Leader Harry Reid (D-NV), are introducing a fully paid-for bill to ensure student loan interest rates for more than 7 million undergraduate students do not dramatically increase this year.

The current fixed interest rate on Stafford federal subsidized loans is 3.4 percent, but that rate will double to 6.8 percent on July 1, 2013 unless Congress takes action.  However, Congress is not expected to begin consideration of the reauthorization of the Higher Education Act, the primary law governing federal investment in higher education, until after the “doubling” deadline.

The Reed-Harkin Student Loan Affordability Act of 2013 (S. 953) would freeze need-based student loan interest rates for two years while Congress works on a long-term solution to slow the rapid accumulation of student-loan debt, and is fully paid for by closing three egregious tax loopholes.  Specifically, the bill would: limit the use of tax-deferred retirement accounts as a complicated estate planning tool; close a corporate offshore tax loophole by restricting “earnings stripping” by expatriated entities; and close an oil and gas industry tax loophole by treating oil from tar sands the same as other petroleum products.

       
A number of organizations have gotten on board with the senators’ efforts. The Institute for College Access and Success released a statement after the bill was introduced today:
       
Unlike some recent proposals, this bill does not require students to bear much higher rates in the future to pay for low rates this fall.  Instead, it’s a smart, short-term solution that keeps subsidized Stafford loans at the current fixed rate of 3.4% for two years.  It pays for itself by closing unnecessary tax loopholes, two of which President Obama included in his most recent budget proposal.
       
And Campus Progress, U.S. PIRG, U.S. Student Association and Young Invincibles released a joint statement also applauding the senators' efforts, noting that the bill “bill creates a workable solution to keep student loan interest rates low until 2015 while Congress seeks to reauthorize the Higher Education Act and reach a comprehensive solution to the student loan crisis that is good for students.”

The I Am Not a Loan campaign is calling for folks to take action and write to their members of Congress in support of the Student Loan Affordability Act. Here’s the link to take action.

Originally posted to i am not a loan on Wed May 15, 2013 at 01:18 PM PDT.

Also republished by The Democratic Wing of the Democratic Party.

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Comment Preferences

  •  Why should we support this bill over Sen Warren's? (5+ / 0-)
    Recommended by:
    ExStr8, mollyd, phonegery, Elwood Dowd, myboo

    You call this legislation good news?  Are we supposed to cheer turning student loans into a profit center?  Why should the student loan interest rate be higher than the federal funds rate? Why should there be any need to pay for the lower rate with closing tax loopholes? Why does the federal government need to charge interest at all?  It's unconscionable for the government to profit off of the mortgaging of young people's futures.

    Student loans should not be a government profit center, and any interest above the rate inflation is too much.

    "Some folks rob you with a six-gun, some rob you with a fountain pen." - Woody Guthrie

    by Involuntary Exile on Wed May 15, 2013 at 01:50:54 PM PDT

    •  It sounds like a (0+ / 0-)

      'hurry up and kick this can down the road' move to me.  Warren has it right: why not let student loans get the same rate as the banks, and keep that rate for the same length of time the banks have been profiting from their getting a gift rate.

      Time is a long river.

      by phonegery on Wed May 15, 2013 at 02:52:18 PM PDT

      [ Parent ]

      •  Looks lie a move to slap down a freshman senator (1+ / 0-)
        Recommended by:
        phonegery

        if you ask me.  Senior members taking the wind out of a populist hero's sails. This is how they bury her popular legislation.  Can't let it pass, nooo.  That would make her a hero, and serious vice-presidential material in 2016.  Kill her bill by rolling out with much bigger fanfare another bill closer to what private student loan issuers want.

        I smell a rat it it smells like big banks.

        "Some folks rob you with a six-gun, some rob you with a fountain pen." - Woody Guthrie

        by Involuntary Exile on Wed May 15, 2013 at 03:05:58 PM PDT

        [ Parent ]

    •  We can do both can't we? (0+ / 0-)

      Unless I missed something, Senator Warren is nowhere close to having the votes she needs. Therefore doing nothing ,because we cannot do the best, is not the most helpful course of action given the circumstances.

      You need to give that speech to the Republicans in Congress and to voters. I really do not think the diarist, or most of us here at DK, really need it.

      We also need to stop pretending that this wasn't a most urgent moral issue before this administration took over. Students have been getting hosed now for decades.

      There is not a thing wrong with stopping that rate increase while we work to get the Warren bill passed. I assume people are going to help, right?

      The politicians may be bought, and the system corrupt, but it is our duty to fix these things.

      by sebastianguy99 on Wed May 15, 2013 at 11:05:42 PM PDT

      [ Parent ]

  •  Just think how mad Harry will be when it's (1+ / 0-)
    Recommended by:
    phonegery

    filibustered! No more mister nice guy.

    "They will not collect a ransom in exchange for not crashing the American economy. The full faith and credit of the United States of America is not a bargaining chip."

    by TofG on Wed May 15, 2013 at 01:51:54 PM PDT

  •  It probably wouldn't, if there were not such thing (0+ / 0-)

    as default risk, among others.

    Why does the federal government need to charge interest at all?
    Then again, if these risks didn't exist, no one would have to charge interest.
  •  Our take (0+ / 0-)

    Hey, guys -- we agree that the concept put forth in Sen. Warren’s bill is very good. Nobody should be making money off of students. Warren's plan is a step in the right direction for this conversation to take in developing a long-term solution. But, what we need now is to make sure the rates don’t double and don’t become purely variable without a cap. And we have about 40 days left now to do that.

    The Reed/Harkin bill is actually a good bill. It's one that will allow advocates to fight for a solution like Warren’s come 2014, when it’s time to re-authorize the Higher Education Act.

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