WASHINGTON (5/9/12)--A Senate bill that would prevent federal student loan interest rates from doubling from 3.4% to 6.8% this summer failed to collect the votes needed to ensure debate by the full Senate on Tuesday, but could still be brought up for Senate approval in the future.
The Stop Student Loan Interest Rate Hike Act (S. 2343) would extend the reduced interest rate for Federal Direct Stafford Loans beyond the current cutoff date of July 1.
The 52 to 45 vote mainly followed party lines, but many Republicans and Democrats reportedly agree that federal student loan interest rates should remain low. The difference between the two sides appears to be how the cost of subsidizing student loans would be paid for.
S. 2343 would not alter credit union student lending, but other pieces of legislation that would impact credit union student loan practices have been offered in the Senate.
The Know Before You Owe Act of 2012 (S. 2280) was unveiled by Sens. Richard Durbin (D-Ill.) and Tom Harkin (D-Iowa), and has been referred to the Senate Banking Committee. That bill would require prospective borrower's school to confirm the student's enrollment status, cost of attendance and estimated federal financial aid assistance before the private student loan is approved, and a number of loan disclosures would also need to be provided to new loan recipients. Lenders would also need to frequently update students or loan holders on the status of their loan.
The Fairness for Struggling Students Act (S. 1102), which was also offered by Durbin in 2011, would make it easier for student loan debtors to discharge privately issued student loans in bankruptcy proceedings.
The Consumer Financial Protection Bureau is also addressing student loan issues, working with the U.S. Department of Education and launching the "Know Before You Owe" project to help borrowers, including student borrowers, understand debt implications. A full study on the role of schools in the private student loan marketplace, student loan underwriting criteria, repayment terms and behavior, loan servicing and loan modification, and other student loan issues is expected to be released by the agency this summer.