Wednesday, June 27, 2012

Senate Announces Deal to Keep Student Interest Rates Low

Campus Progress reports Senate Announces Deal to Keep Student Interest Rates Low.

"With just a few days before student loan interest rates are set to double, party leaders in the Senate have reached a deal to keep the rate steady for 7.4 million students. The $6 billion agreement would be paid for primarily through savings from a change in how employer pension payments are calculated. Some savings will also come from tying the amount of time students can borrow at the low rate to the length of their degree program."

They still have to vote on it but the details seem to be:

"Under the deal, a 25-year stabilization range would be created that could be used to reduce dramatic fluctuations in calculating companies’ pension contributions. When the two-year corporate bond rates that companies have previously used to determine their pension liabilities fall outside of this 25-year range, they can now be computed using the closest two-year rate within that timeframe. This will result in businesses taking fewer tax deductions for their contributions and is estimated to generate roughly $5 billion in tax revenue.

Additionally, employers will be required to pay an increased rate to insure their pensions through the Pension Benefit Guaranty Corporation, the federal government agency that oversees millions of employees’ pensions. The change is expected to generate $500 million.

The agreement also changes the amount of time students can borrow Stafford loans at the 3.4 percent interest rate, capping borrowing at 150 percent of the length of the degree program. For instance, a student earning a four-year bachelor’s degree would be eligible for subsidized Stafford loans for up to six years. Previous estimates have indicated this could save as much as $1.2 billion over the next decade, but specifics of this change have not yet been released.

This cap was originally included in President Barack Obama’s 2013 budget and was to be used to fill part of a $6 billion shortfall in Pell Grant funding for fiscal year 2014. As a result, Congress will need to find additional offsets to fill the Pell shortfall."

I don't follow all of this but it seems Republicans agreed to raise corporate taxes to help students. I wonder how that will play?


The Dad said...

If your local ice cream shop didn't take advantage of this situation by advertising a special on Moose Tracks flavor, they are idiots.

The Dad said...

and yes...apparently I commented on the wrong post...