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U.S. Senate Bill To Reverse Doubling of Student Loan Interest Rates Fails, Hagan and Foxx Chime In

By Jesse Wood

July 10, 2013. In a 51-49 vote Wednesday, the U.S. Senate effectively halted a bill that would freeze interests rates on subsidized Stafford student loans at 3.4 percent for one-year until Congress decides upon a long-term solution, according to The Associated Press.

On July 1, interest rates jumped from 3.4 percent to 6.8 percent.

The Senate bill that failed today because of a procedural vote was co-introduced by U.S. Sen. Kay Hagan (D-NC).

“It is unacceptable that we have not been able to come together in the Senate to keep federal student loans affordable for middle class families,” Hagan said in statement. “Passing this bill would give us time to find a long-term solution for the federal student loan program without placing a burden on students who rely on these loans right now. North Carolina students and middle class families should not be penalized for dysfunction and partisanship in Washington.”

Hagan’s release added that the rates would double for 176,000 North Carolina students and that subsidized Stafford loans are “need-based, with the majority of borrowers coming from families who make $60,000 or less a year.”

U.S. Rep. Virginia Foxx (R-NC) chimed in today as well, saying “leading from behind on student loans isn’t working.”

She wasn’t advocating for Hagan’s “Keep Student Loans Affordable Act of 2013,” though. She was touting a bill she co-sponsored called “Smarter Solutions for Students Act,” which passed in the House in late May but wasn’t acted upon in the Senate.

Foxx’s co-sponsored bill links student loan rates to the financial markets and has a cap for when rates spike. The “Smarter Solutions for Students Act” includes an 8.5 percent cap on Stafford loan interest rates and a 10.5 percent cap on PLUS loans. Foxx said her plan was similar to a proposal in the president’s 2014 budget plan.

In a statement released today, Foxx said, “It’s obvious the White House’s apparent choice to lead from behind on this issue isn’t working. Though House Republicans voted more than a month ago to approve a long-term solution to protect student borrowers from an arbitrary doubling of interest rates, Senate Democrats haven’t been able to agree on a solution of their own. The policy differences between the House’s Smarter Solutions for Students Act and the President’s original budget proposal are minor. The President should direct his Senate to build off of those commonalities and not waste the opportunity we have to strengthen America’s student loan system together. Preserving the politics of this annual fight would be a real disservice to students and taxpayers.”

Entire July 10 Statements from Foxx, Hagan

Foxx: Leading From Behind on Student Loans Isn’t Working

U.S. Rep. Virginia Foxx

Washington, D.C. – Higher Education Subcommittee Chairwoman Virginia Foxx (R-NC), original cosponsor of the House of Representatives’ Smarter Solutions for Students Act, issued the following statement upon the most recent Senate failure to address the July 1 doubling of select federal student loan interest rates:

“It’s obvious the White House’s apparent choice to lead from behind on this issue isn’t working. Though House Republicans voted more than a month ago to approve a long-term solution to protect student borrowers from an arbitrary doubling of interest rates, Senate Democrats haven’t been able to agree on a solution of their own. The policy differences between the House’s Smarter Solutions for Students Act and the President’s original budget proposal are minor. The President should direct his Senate to build off of those commonalities and not waste the opportunity we have to strengthen America’s student loan system together. Preserving the politics of this annual fight would be a real disservice to students and taxpayers.”

Hagan Statement on Senate Student Loan Interest Rate Vote

U.S. Sen. Kay Hagan

Washington, DC – U.S. Senator Kay Hagan released the following statement after the Senate failed to pass a procedural hurdle to take up the Keep Student Loans Affordable Act of 2013. Hagan introduced this legislation with Senator Jack Reed (RI) in June to maintain a 3.4 percent interest rate on subsidized Stafford loans for an additional year as Congress works on a long-term, sustainable solution for the federal student loan program. On July 1, those interest rates doubled from 3.4 percent to 6.8 percent for 176,000 North Carolina students.

“It is unacceptable that we have not been able to come together in the Senate to keep federal student loans affordable for middle class families,” said Hagan, Chairman of the Senate Subcommittee on Children and Families. “Passing this bill would give us time to find a long-term solution for the federal student loan program without placing a burden on students who rely on these loans right now. North Carolina students and middle class families should not be penalized for dysfunction and partisanship in Washington.”

The Keep Student Loans Affordable Act of 2013 would keep the interest rate for any subsidized Stafford loan made between July 1, 2013 and June 30, 2014 at the current rate of 3.4 percent. Subsidized Stafford loans are need-based, with the majority of borrowers coming from families who make $60,000 or less a year.