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Senators Introduce Bipartisan Student Loan Interest Measure

June 28, 2013—Senators Joe Manchin (D-W.V.), Richard Burr (R-N.C.), Tom Coburn (R-Okla.), Lamar Alexander (R-Tenn.), Angus King (I-Maine), and Tom Carper (D-Del.) June 27 introduced the Bipartisan Student Loan Certainty Act (S. 1241). The measure is designed as a compromise between previous market-based proposals to avoid the impending July 1 doubling of subsidized Stafford loan interest rates for undergraduates [see Washington Highlights, June 7].

Similar to the House Republican’s and the president’s proposals, S. 1241 sets interest rates each academic year based on the U.S. Treasury 10-year borrowing rate plus 1.85 percentage points for subsidized and unsubsidized undergraduate Stafford loans, plus 3.4 percentage points for graduate Stafford loans, and plus 4.4 percentage points for PLUS loans (including GradPLUS). The interest rate would be fixed over the life of the loan and the cap on interest rates for consolidated loans would remain at 8.25 percent. 

Based on current 10 year Treasury rates, the proposal would reduce unsubsidized Stafford loan interest rates for medical students from 6.8 percent to 5.21 percent.  Likewise, it would reduce GradPLUS interest rates from 7.9 percent to 6.21 percent.

According to the co-sponsors’ June 27 press release, the Congressional Budget Office (CBO) determined this legislation would reduce the deficit by $1 billion over ten years.

Senate Democratic leadership has indicated their preference for passing a temporary extension of current interest rates. However, before adjourning for the July 4 congressional recess, Senate Minority Leader Mitch McConnell (R-Ky.) objected to Sen. Jack Reed (D-R.I.)’s request for unanimous consent to consider a bill (S. 1238) that would extend the current interest rate for one year.  Sen. Reed proceeded to object to Sen. McConnell’s request for unanimous consent to consider S. 1241.

The House passed its version of a market-based student loan interest rate formula in May despite a veto threat from the White House [see Washington Highlights, May 24].


Matthew Shick, JD
Director, Gov't Relations & Regulatory Affairs
Telephone: 202-862-6116


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Washington Highlights, a weekly electronic newsletter, features brief updates on the latest legislative and regulatory activities affecting medical schools and teaching hospitals.

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