instaPoll: Which solution do you support to address increased student loan rates?

Office of Congressman J. Randy Forbes
2013-06-29 10:22:00
Under the College Cost Reduction and Access Act of 2007, incrementally lower fixed interest rates were established for Direct Subsidized Loans to be available to undergraduate students with financial need during the four-year period from 2008-2009 through 2011-2012. Under the law, the rates were decreased from 6.8% to the current rate of 3.4%; however, the 3.4% interest rate was not made permanent. Under the Moving Ahead for Progress in the 21st Century Act, the authority to make Direct Subsidized Loans with a 3.4% interest rate was extended for one additional year. This authority expires June 30, 2013, after which Direct Subsidized Loans made for 2013-2014 and future years will have a fixed interest rate of 6.8%. The Senate has yet to act on a proposal; however, the House recently passed the Smarter Solutions for Students Act, H.R. 1911, which moves all federal student loans (except Perkins loans) to a market-based interest rate. Under the legislation, student loan interest rates would reset once a year and move with the free market. Interest rates would be set using the following formula: β€’Stafford loans (subsidized and unsubsidized): 10-year Treasury Note plus 2.5 percent, capped at 8.5 percent. β€’PLUS loans (graduate and parent): 10-year Treasury Note plus 4.5 percent, capped at 10.5 percent. Based on current forecasts, the 10-year Treasury Note (a debt obligation issued by the United States government that matures in 10 years) is expected to be the following: 2013 – 1.9 percent 2015 – 3.2 percent 2017 – 4.9 percent 2014 – 2.5 percent 2016 – 4.1 percent 2018-2023 – 5.2 percent Question of the week: Which solution do you support to address increased student loan rates? ( ) Extend the current rate of 3.4% for one year. ( ) Establish a market-indexed system with variable interest rates. ( ) Establish a market-indexed system with fixed interest rates. ( ) Allow the rates to return to the original 6.8%. ( ) I don’t know. ( ) Other. Take the instaPoll here. Find the results of last week’s instaPoll here.

 

 

Under the College Cost Reduction and Access Act of 2007, incrementally lower fixed interest rates were established for Direct Subsidized Loans to be available to undergraduate students with financial need during the four-year period from 2008-2009 through 2011-2012.  Under the law, the rates were decreased from 6.8% to the current rate of 3.4%; however, the 3.4% interest rate was not made permanent.

Under the Moving Ahead for Progress in the 21st Century Act, the authority to make Direct Subsidized Loans with a 3.4% interest rate was extended for one additional year. This authority expires June 30, 2013, after which Direct Subsidized Loans made for 2013-2014 and future years will have a fixed interest rate of 6.8%.

The Senate has yet to act on a proposal; however, the House recently passed the Smarter Solutions for Students Act, H.R. 1911, which moves all federal student loans (except Perkins loans) to a market-based interest rate.  Under the legislation, student loan interest rates would reset once a year and move with the free market.   Interest rates would be set using the following formula:

  • Stafford loans (subsidized and unsubsidized): 10-year Treasury Note plus 2.5 percent, capped at 8.5 percent.
  • PLUS loans (graduate and parent): 10-year Treasury Note plus 4.5 percent, capped at 10.5 percent.

Based on current forecasts, the 10-year Treasury Note (a debt obligation issued by the United States government that matures in 10 years) is expected to be the following:

            2013 – 1.9 percent                     2015 – 3.2 percent                     2017 – 4.9 percent 
            2014 – 2.5 percent                     2016 – 4.1 percent                     2018-2023 – 5.2 percent


Question of the week: 


(  ) Extend the current rate of 3.4% for one year.
(  ) Establish a market-indexed system with variable interest rates.
(  ) Establish a market-indexed system with fixed interest rates.
(  ) Allow the rates to return to the original 6.8%.
(  ) I don’t know.
(  ) Other. 


Take the instaPoll

Find the results of last week’s instaPoll

 

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