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Battle Over Student Loans - Full Coverage

Latest Post: 05/08/2012 10:57 AM First Post: 10/26/2011 01:48 PM (6 stories) 1 pictures 2 videos

Latest Update Debate on student loan plan blocked

05/08/2012 10:57 AM by Associated Press

President makes a move to ease up student loan rules

Latest Update Debate on student loan plan blocked

05/08/2012 10:57 AM by Associated Press

WASHINGTON (AP) - Republicans have blocked the Senate from debating a Democratic bill keeping interest rates on college loans from doubling this summer for 7.4 million students.

Republicans say they support heading off higher rates on subsidized Stafford loans. They oppose how Democrats would pay for the measure - raising payroll taxes on high-earning stockholders of some privately owned corporations.

The vote was largely symbolic because the measure had no chance of approval in the Republican-run House. It was also designed with November's elections in mind because it could produce fodder for Democratic commercials against GOP senators.

Republicans want a vote on their own bill freezing interest rates and paid for by abolishing a health care fund.

Tuesday's vote was 52-45 to debate the measure - eight votes short of the 60 needed.

GOP ignores veto threat, passes student loan bill

04/27/2012 11:05 AM by Associated Press, MN

ASHINGTON (AP) - Republicans have ignored a White House veto threat and passed a bill to keep interest rates on millions of federal student loans from doubling this summer.

The House approved the bill Friday on a 215-195 vote, despite pressure from conservative groups.

The election-year bill has evolved from a dispute over helping students into a battle between the two parties over how to help families cope with the weak job market and ailing economy.

The White House and most Democrats opposed the $5.9 billion bill because of how Republicans covered the costs: eliminating a preventive health care fund in President Barack Obama's health care law. They say the program mostly benefits women, while Republicans call it a loosely controlled slush fund.

White House threatens to veto student loan bill

04/27/2012 09:23 AM by Associated Press, MN

WASHINGTON (AP) - The White House has threatened to veto a Republican bill keeping federal student loan rates from rising this summer.

A White House statement blamed the way the legislation would pay its $5.9 billion costs: by cutting a preventive health fund created under President Barack Obama's health care overhaul law of 2010.

The White House called those health cuts politically motivated and not a serious response to the problems students face.

The veto threat was issued as the GOP-run House began debating the legislation.

Even if it passes as expected, the measure seems certain to go nowhere in the Democrat-controlled Senate. Democrats want to pay for the measure by boosting payroll taxes paid by high-earning owners of some private firms.

Speaker: House to vote Friday on student loans

04/25/2012 01:37 PM by The Associated Press (KO)

WASHINGTON (AP) - Speaker John Boehner says the House will vote Friday on a Republican bill preventing interest rates on federal student loans from doubling this summer. But the legislation will be paid for by cutting money from President Barack Obama's health care overhaul law.

With both parties competing for election-year support from students, Obama has been pressuring Congress to pass legislation keeping the current 3.4 percent interest rates on subsidized Stafford loans from doubling on July 1. Senate Democrats have introduced a bill that would do so, and would cover the $5.9 billion price tag by raising payroll taxes on the upscale owners of some privately owned corporations.

Boehner is trying to turn the tables on Democrats by scheduling Friday's vote, but paying for the measure in a way Republicans prefer.

Student Loan Debt Surpasses Credit Card Debt In U.S.

04/03/2012 07:32 AM by Associated Press (DS)

WASHINGTON (AP) - The federal student loan program seemed like a great idea when it was started more than four decades ago. But many borrowers these days are close to flunking out, tripped up by painful real-life lessons in math and economics.

Surging above $1 trillion, U.S. student loan debt has surpassed credit card and auto-loan debt. This debt explosion jeopardizes the fragile recovery, increases the burden on taxpayers and possibly sets the stage for a new economic crisis.

With a still-wobbly jobs market, these loans are increasingly hard to pay off. Unable to find work, many students have returned to school, driving up their indebtedness. Average student loan debt recently topped $25,000, up 25 percent in 10 years. And the mushrooming debt, much of it government-backed, has direct implications for taxpayers.

Obama announces help for student loan borrowers

10/26/2011 01:48 PM by KO, The Associated Press

DENVER (AP) - President Barack Obama recalled his struggles with student loan debt as he unveiled a plan Wednesday that could give millions of young people some relief on their payments.
Speaking at the University of Colorado Denver, Obama said that he and his wife, Michelle, together owed more than $120,000 in law school debt that took nearly a decade to pay off. He said that sometimes he'd have to make monthly payments to multiple lenders, and the debt meant they were not only paying for their own degrees but saving for their daughters' college funds simultaneously.
"I've been in your shoes. We did not come from a wealthy family," Obama said to cheers.
Obama said it's never been more important to get a college education, but it's also never been more expensive. Obama said his plan will help not just individuals, but the nation, because graduates will have more money to spend on things like buying homes.
"Our economy needs it right now and your future could use a boost right now," Obama said.
Obama's plan will accelerate a measure passed by Congress that reduces the maximum required payment on student loans from 15 percent of discretionary income annually to 10 percent. He will put it into effect in 2012, instead of 2014. In addition, the White House says the remaining debt would be forgiven after 20 years, instead of 25. About 1.6 million borrowers could be affected.
He will also allow borrowers who have a loan from the Federal Family Education Loan Program and a direct loan from the government to consolidate them into one. The consolidated loan would carry an interest rate of up to a half percentage point less than before. This could affect 5.8 million borrowers.
Student loans are the No. 2 source of household debt. The president's announcement came on the same day as a new report on tuition costs from the College Board. It showed that average in-state tuition and fees at four-year public colleges rose $631 this fall, or 8.3 percent, compared with a year ago. Nationally, the cost of a full credit load has passed $8,000, an all-time high.
Student loan debt is a common concern voiced by Occupy Wall Street protesters. Obama's plan could help him shore up re-election support among young voters, an important voting bloc in his 2008 election. But, it might not ease all their fears.
Anna Van Pelt, 24, a graduate student in public health at the University of Colorado Denver who attended the speech, estimates she'll graduate with $40,000 in loans. She called Obama's plan a "really big deal" for her, but said she still worries about how she'll make the payments.
"By the time I graduate, my interest rate is going to be astronomical, especially when you don't have a job," Van Pelt said. "So it's not just paying the loans back. It's paying the loans back without a job."
The White House said the changes will carry no additional costs to taxpayers.
Sen. Mike Enzi, R-Wyo., his party's ranking member on the Senate Health, Education, Labor and Pensions Committee, said in a statement that while he supports efforts to help struggling graduates, the president's plan was crafted behind closed doors and "we are left with more questions than answers."
Last year, Congress passed a law that lowered the repayment cap and moved student loans to direct lending by eliminating banks as the middlemen. Before that, borrowers could get loans directly from the government or from the Federal Family Education Loan Program; the latter were issued by private lenders but basically insured by the government. The law was passed along with the health care overhaul with the anticipation that it could save about $60 billion over a decade.
The change in the law was opposed by many Republicans. At a hearing Tuesday, Rep. Virginia Foxx, R-N.C., who chairs a subcommittee with oversight over higher education, said it had resulted in poorer customer service for borrowers. And Senate Republicans issued a news release with a compilation of headlines that showed thousands of workers in student lending, including those from Sallie Mae Inc., had been laid off because of the change.
Today, there are 23 million borrowers with $490 billion in loans under the Federal Family Education Loan Program. Last year, the Education Department made $102.2 billion in direct loans to 11.5 million recipients.

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