WASHINGTON, DC – In an effort to protect taxpayers and prevent the interest rate on need-based student loans from doubling on millions of Americans, 35 Senate Democrats, including U.S. Senator Ben Cardin (D-MD) today introduced a fully paid for bill to lock in the rate at 3.4 percent for one year.
The Keep Student Loans Affordable Act of 2013 (S. 1238) will secure the low interest rate for an additional year as Congress works on a long-term and sustainable approach for the federal student loan program.
Earlier this month, Senate Republicans blocked legislation to maintain the low student loan interest rates for two years, and instead are championing legislation with ballooning interest rates that would increase student debt and make it harder for middle-class families to afford college.
The current 3.4 percent interest rate on subsidized federal Stafford loans is set to double on July 1, unless Congress acts. This rate hike would add about $1,000 of additional debt on the average student over the life of the loan. If enacted, the Keep Student Loans Affordable Act of 2013 would retroactively set the interest rate for any subsidized Stafford loan made between July 1, 2013 and June 30, 2014 at 3.4 percent. The bill is fully paid for by closing a loophole that currently allows those who inherit certain IRAs and 401(k)s to avoid paying the taxes on those accounts for many years. The bill does not create a new tax, it would simply cap the amount of time payment of taxes can be delayed at five years.
“Making college more affordable – not less – is just common sense. Saddling young adults with even more debt will not help jumpstart our economy and it makes little sense to add to their already substantial college debt by allowing the interest rate on student loans to double. We must stop this increase in student loan interest rates from taking effect while we work out a long-term solution to protect our students and our nation’s future,” said Senator Cardin.
“We need to keep student loans affordable, but we must not sell out our students and make them mortgage their future to afford college. Both parties agree on the need for a comprehensive overhaul to make our financial aid system more effective, affordable, and sustainable. But Republicans see the deadline as a chance to cram through a long-term bill that would keep rates low for a year or so but then in successive years make college more expensive for working families. They have blocked legislation to keep rates low and want to do away with important safeguards for students and their families. The American people can’t afford that. The Keep Student Loans Affordable Act is a fiscally responsible, short-term solution to keep rates low now and build long-term consensus as Congress does the work necessary to address the bigger picture of college affordability,” said Senator Jack Reed.
In addition to Senator Cardin, the Keep Student Loans Affordable Act of 2013 is sponsored by Senators Jack Reed (D-RI) and Kay Hagan (D-NC), as well as Al Franken (D-MN); Tom Harkin (D-IA); Debbie Stabenow (D-MI); Elizabeth Warren (D-MA); Patty Murray (D-WA); Harry Reid (D-NV); Mary Landrieu (D-LA); Mark Pryor (D-AR); Dick Durbin (D-IL); Sheldon Whitehouse (D-RI); Tom Udall (D-NM); Amy Klobuchar (D-MN); Sherrod Brown (D-OH); Bob Menendez (D-NJ); Patrick Leahy (D-VT); Bernie Sanders (D-VT); Jeanne Shaheen (D-NH); Brian Schatz (D-HI); Carl Levin (D-MI); Mazie Hirono (D-HI); Claire McCaskill (D-MO); Chris Murphy (D-CT); Richard Blumenthal (D-CT); Tammy Baldwin (D-WI); Mark Begich (D-AK); Martin Heinrich (D-NM); Kristen Gillibrand (D-NY); Jeff Merkley (D-OR); Jay Rockefeller (D-WV); Ron Wyden (D-OR); Barbara Boxer (D-CA); and Barbara Mikulski (D-MD).