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Early summer is usually the designated
time of year to get down to student loan business on Capitol Hill, attempting
to beat whatever impending change will go into effect on July 1st. This year the beginning of classes also stirred
up more on the student loan debate.
Senator Elizabeth Warren’s bill, the Students Emergency
Loan Refinancing Act, would have amended the Higher Education Act of 1965
to provide for the refinancing of certain Federal student loans. The change would’ve allowed those with loans
acquired before 2010 to refinance to an interest rate below four percent. Additionally, the funding was designed to
implement the “Buffet Rule,” which basically would’ve subsidized a student loan
repayment $1 a day (saving the average debtor $2,000 over the life of the loan)
by raising taxes on those who make more than $1 million annually. Opponents disagreed with this funding method
as well as with freezing interest rates for past students while rates on
current/new loans would continue to rise.
Other issues included allowing private loans to be refinanced as federal
loans. The bill was killed due to a
failed vote for cloture (cloture deals with filibustering) in June and again on
September 16th.
Also brought to the table this summer
and is awaiting action within the Senate Finance Committee is the Dynamic Repayment
Act of 2014 spearheaded by a bipartisan team – Senators Warner and Rubio. This bill would create an income contingent
repayment, providing stronger protections for borrowers, encourage responsible
borrowing, and save taxpayer dollars.
The stark contrast from Warren’s bill is that instead of letting
borrowers off the hook for the full amount of their payment, it ensures
borrowers will make their full payment by automatically deducting ten percent
of a graduate’s paycheck with a $10,000 annual exemption. Opponents argue that this automatic deduction
could stretch already thin paychecks even thinner.
Some speculate that proposed legislation
such as these will continue to be moved throughout the fall because many desire
to have the issue pushed to the forefront of the election. Considering the looming state of the student
loan debt crisis, this topic will likely be heavily debated regardless of these
bills’ statuses.
Will what the candidates say
specifically on student loans sway how you will vote this upcoming election?
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