In an effort to protect taxpayers and prevent the interest rate from doubling on millions of Americans, 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.
“At a time when more than half of college students in Washington state rely on student loans to finance their education, I am disappointed a long-term solution to this problem was not reached before the July 1 deadline,” said Senator Murray. “Not only can these students not afford this burden, they can’t afford any further Congressional gridlock on this issue. I am proud to introduce this bill with Senator Reed and I urge my Republican colleagues to work with us to invest in America’s future by making college more affordable for our nation’s middle class.”
Earlier this month, Senate Republicans blocked legislation to maintain the low student loan interest rate 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.
Editor’s Note: This article first appeared on www.hometowndebate.com 6/28/13. If you would like to respond to this story go to hometowndebate.com