WASHINGTON (6/25/13)--With the July 1 deadline for federal student loan action rapidly approaching, student lending issues remain a high priority in the U.S. Congress. The Senate Banking Committee today has scheduled a full committee hearing entitled "Private Student Loans: Regulatory Perspectives."
The federal student loan rate is currently capped at 3.4%, and this limit will double to 6.8% on July 1 if Congress does not take action. Legislators are reportedly working to craft a solution. Other potential student loan fixes have also been introduced, but none have been passed.
Potential student loan fixes include:
- The Smarter Solutions for Students Act (H.R. 1911), which would tie student loan interest rates to 10-year U.S. Treasury notes, and allow those student loan rates to reset each year. This bill passed the House in late May;
- The Bank on Students Loan Fairness Act (S. 897), which would offer federal student loans at the same rates that are charged to banks through the Federal Reserve discount window. That rate is currently 0.75%;
- The Student Loan Fairness Act (H.R. 1330), which would cap federal student loan interest rates at 3.4% and also allow some borrowers to refinance their student loan debt to improve their rate; and
- The Federal Student Loan Refinancing Act (S. 1066), which would enable federal student loan holders with interest rates above 4% to refinance those loans at a fixed rate of 4%.
Two other student lending bills failed in the Senate.
The Consumer Financial Protection Bureau last week emphasized that any federal student loan rate increase that occurs on July 1 will apply only to new loans. Federal direct loan rates will remain at 0% while a given student is still in school, the CFPB added.
Other hearings credit unions will want to watch out for this week include:
- A Tuesday Senate Appropriations financial services and general government subcommittee hearing on the fiscal 2014 budget for the Commodity Futures Trading Commission and the Securities and Exchange Commission;
- A Wednesday Joint Economic Committee hearing on reducing red tape through smarter regulations;
- A Wednesday House Financial Services housing and insurance subcommittee hearing on how the U.S. Department of Housing and Urban Development's Moving-to-Work Program benefits public and assisted housing residents; and
- A House Financial Services Committee hearing entitled "Examining How the Dodd-Frank Act Could Result in More Taxpayer-Funded Bailouts."
The Senate Banking Committee will hold a hearing on the nominations of Richard Metsger to be a member of the National Credit Union Administration board, Melvin Watt to be director of the Federal Housing Finance Agency, and others on Thursday. (See News Now
story: NCUA Nomination Could Move Quickly.)