Resolution would maintain 3.4 percent interest rate retroactively to today
WASHINGTON – Prior to the U.S. Senate’s adjournment for this week’s recess, U.S. Senator Robert Menendez became an original co-sponsor of legislation that would extend the 3.4 percent interest rate for an additional year. The Senate is scheduled to vote on S. 1238, the Keep Student Loans Affordable Act of 2013, on Wednesday, July 10.
“People carrying student loan debt cannot bear an additional $1,000 burden any better now than they could last year, which is why I hope that members of Congress will not delay in supporting the one-year extension of the current interest rates that I co-sponsored and that the Senate is scheduled to vote upon on July 10,” said Sen. Menendez. “Students and middle class families need the federal government’s help, not hassles. If that extension passages, I would urge my colleagues in Congress to focus on helping those with student loan debt instead of advancing proposals that would result in worse outcomes than interest rates doubling.”
Today, July 1st, interest rates on subsidized Stafford loans have doubled from 3.4 percent to 6.8 percent. If Congress does not act, the result would be an additional $1,000 in loan debt that would act like an extra tax on a college education for over seven million students.
The one-year extension of the 3.4 percent interest rate would give Congress time to work on a comprehensive solution to student loan debt and rising higher education costs.
The bill is fully paid for by closing a loophole for tax-deferred accounts. The loophole 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. This provision, which was included in President Barack Obama’s budget, saves nearly $4.6 billion.