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News Now

Washington
Student Lending Highlighted In Congress, Press
WASHINGTON (6/7/13)--Stifling levels of post-graduate debt and looming federal student loan rate increases have kept student lending issues in the news in recent months. The Credit Union National Association's first annual High School Student Borrowing Survey, which found a surprising lack of financial knowledge among high school seniors, has been highlighted as part of this coverage in a recent Examiner.com article.

CUNA's survey, released last month, found that nearly half of high school seniors don't know how much they will need for college costs. That lack of knowledge translates to a greater student-debt burden after college.

The Examiner, an online publication, highlighting the CUNA survey Thursday, noted that Paul Gentile, CUNA executive vice president, strategic communications and engagement, said the findings "suggest not just a lack of awareness of college cost or how debt works but also a lack of basic financial knowledge." For more from this coverage, use the resource link.

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. Two student loan bills that could potentially address this situation failed to pass the Senate on Thursday.

The Student Loan Affordability Act (S. 953), which would cap federal student loan rates at 3.4% for another two years, failed a cloture vote on a 51 to 46 margin.

S. 1003, which would tie student loan interest rates to 10-year U.S. Treasury notes, plus 3%, failed by a 40 to 57 vote.

Other potential student loan fixes that have been introduced 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 U.S. 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%.
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