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Student Loan Bill Fails in Senate Following President Obama’s PAYE Expansion

June 13, 2014— The Senate June 11 defeated (56-38) a bill sponsored by Sen. Elizabeth Warren to allow borrowers with federal Stafford loans dated prior to July 1, 2013, to refinance their loans [see Washington Highlights, May 9]. Refinanced loans under the Bank on Students Emergency Loan Refinancing Act (S. 2292) would carry corresponding 2013-2014 academic year interest rates (5.41 percent for Direct Loans and 6.41 percent for GradPLUS).

The cost of S. 2292 would have been offset by increasing taxes on the wealthy under the so-called “Buffet Rule.” While Senate Republicans criticized the measure as an unnecessary subsidy, Senate Democrats have promised to keep the issue alive as part of next year’s reauthorization of the Higher Education Act.

Meanwhile, President Obama June 9 issued a presidential memorandum, ordering the Department of Education to expand Pay-As-You-Earn (PAYE) to all borrowers by the end of 2015. The memorandum builds on a previous executive order to expand access to PAYE, which reduces Income-Based Repayment (IBR) to 10 percent of discretionary income [see Washington Highlights, Oct. 28, 2011]. Physicians with loans prior to 2007 who have not completed their residency training are most likely to benefit from the change.


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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Jason Kleinman
Sr. Legislative Analyst, Govt. Relations
Telephone: 202-903-0806