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April 12, 2013, 3:36 pm
Washington — With interest rates on federal student loans set to double this summer, student-advocacy groups have intensified their calls for Congress to find a way to avoid the increase, and lawmakers are scrambling to pass legislation that would overhaul the student-loan system.
President Obama’s loan-reform proposal, which he released on Wednesday as part of his budget for the 2014 fiscal year, suggests switching to a market-based rate, in which interest rates would be set annually and fixed for the duration of each loan.
But some experts say that the options being laid out, including the president’s proposal, will provide only short-term relief for borrowers, and that allowing the rates to double may be a better option in the long run.
Unless Congress acts before July 1, the rates on subsidized Stafford loans will double, from 3.4 percent to 6.8 percent. Lawmakers were…
December 19, 2012, 8:56 pm
Washington — Legislation introduced in Congress this week that would overhaul the federal student-loan programs by changing how interest rates are set and how borrowers repay their loans is getting mixed reviews from student-aid advocates.
The bill, sponsored by Rep. Thomas E. Petri, a Wisconsin Republican, is unlikely to progress through Congress anytime soon, but the proposal could be debated as part of the next reauthorization of the Higher Education Act, which would happen next year at the earliest.
Under the proposal, borrowers’ monthly payments would be capped at 15 percent of their discretionary income, and the money would be withdrawn directly from their paychecks until their loan was paid off. Also, the interest that accrues on a loan would be capped at 50 percent of its original balance.
The proposal would end most of the government’s current loan-forgiveness…