Senate Bill to Extend Current Student Loan Interest Rates Defeated

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Tuesday, Republicans in the U.S. Senate blocked a bill backed by Democrats that would have kept interest rates for certain federal student loans from doubling this July. By a 52-45 majority, GOP senators effectively killed the proposal – entitled the Stop the Student Loan Interest Rate Hike Act of 2012, it marking this Congress’ 21st successful filibuster of a Democratic-sponsored bill, according to The New York Times. If an extension of current federally-subsidized student loan rates does not occur, loan rates for undergraduate students are expected to jump from 3.4 percent to 6.8 later this summer. According to recent reports, American students took out almost twice the value of student loans in 2011 - estimated at about $112 billion – than they did a decade ago. In 2010, student loan debt totaled approximately $1 trillion, eclipsing credit card debt as the nation’s second largest form of debt behind mortgages, USA Today reported.

New Online Service Allows College Students to Compare Financial Aid Data Across Country

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This week, the Consumer Financial Protection Bureau (CFPB) launched a beta version of the Financial Aid Comparison Shopper, an online service designed to help prospective and current college students make financial plans for their post-secondary schooling. The new service allows users to access financial aid information as it pertains to more than 7,500 colleges and universities across the United States. Using data collected by official government statistical agencies, the Financial Aid Comparison Shopper evaluates a wide range of financial information, from estimated student loan payment totals to college-specific data such as graduation and retention rates, as well as federal student loan default percentages. Additionally, the new service includes a “Military Benefit Calculator” that allows service members and veterans to estimate military tuition assistance and GI Bill aid. Last fall, the CFPB launched the “Know Before You Owe” student loan project, unveiling a Financial Aid Shopping Sheet draft that served as a precursor to the Financial Aid Comparison Shopper service.

Past due student loan balance by age. Q3, 2011.

Student Advocates Raise Concerns over Pending Student Loan Interest Rate Increase

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Student advocates worry that a pending interest rate increase on federally-administered student loans will further burden borrowers, potentially adding thousands of dollars to the cost of financing a college degree. Student loan interest rates are set to increase from the current rate of 3.4 percent to 6.8 percent for loans made after June 30. Rates have been at an artificially low 3.4 percent since Congress pasted the College Cost Reduction and Access Act of 2007, a plan to improve educational access by incrementally reducing rates over a four-year period. The rates will jump back to 6.8 percent July 1 if Congress fails to extend the bill, the New York Times reported. Students rallied at the nation’s Capitol last week to protest the increase in subsidized loans, generally made to low- and medium- income undergraduate students through the federal Stafford program, the Associated Press reported.

Students Hopeful New College Loan Program Will Take the Pressure Off

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Beginning in January, students who borrow to pay for college will keep more of their paycheck when it comes time to pay the loans back. Last Wednesday, President Barack Obama announced a plan that would cap monthly payments on federal student loans to 10 percent of the borrower’s discretionary income. The change comes after a petition on the White House website asking for student loan forgiveness received 32,000 signatures. Although the focus of the plan is not on debt relief, the new proposal would forgive student loan debt after 20 years of payments. The program is a modification of an earlier proposal approved by Congress that would have taken effect in 2014 and capped monthly payments at 15 percent of a student’s income.