January 4, 2007

• 110th Democratic Congress to Seek Passage of Student Loan Interest Rate Reduction as a Part of Initial Agenda

---

110th Democratic Congress to Seek Passage of Student Loan Interest Rate Reduction as a Part of Initial Agenda

The House Democrats kicked off the 110th Congress with consideration of their package of measures that will receive swift passage to make a statement to the electorate that a democratically controlled House can be productive. Included in House Democrats' agenda for legislation to pass during the month of January (by the January 23rd State of the Union speech) are:

• ethics reform;
• reinstitution of pay-as-you-go budget rules;
• implementation of some of the 911 Commission recommendations;
• raising the federal minimum wage;
• lowering Medicare prescription drug prices;
• allowing federal support for stem cell research;
• rolling back tax subsidies for oil companies;
• and reducing interest rates on federally subsidized student loans.

All of these initial bills will be taken up, considered, and passed by the full House without being referred to, considered, and reported by House committees.

The House schedule for January is:

• January 4th and 5th — Ethics and budget reform
• Week of January 7th — Minimum wage, stem cell research, prescription drugs
• Week of January 14th — Student loan interest rates and tax subsidies

The student loan interest rate legislation (HR 5) will be taken up on January 17th.

The student loan interest rate reduction bill will offer a "phased-in approach" to reducing student loan interest rates for subsidized loans, rather than halving the rate with a single cut.

The proposal will cut subsidized student loan rates in half, from 6.8 percent to 3.4 percent over five years, to meet the "pay-as-you-go" budget rule.

The interest rate reduction will be proposed to decline to 6 percent this year, with incremental decreases to 3.4 percent by 2011.

The estimated cost of HR 5 is $6 billion over five years. Details have not been finalized, but Democratic staff report the bill is already partially paid for with savings left over from the current fiscal year, and additional money could be put aside by cutting certain administrative costs at the Department of Education.

Democrats highlighted the issue of college affordability throughout their 2006 campaigns and may pursue interest rate cuts for other education loans if they can find offsetting budget cuts or revenue sources. Incoming House Education and the Workforce Chairman George Miller (D-CA) and Senate Health, Education, Labor and Pensions Chairman Edward Kennedy (D-MA) both offered legislation in 2005 and 2006 that proposed to reduce interest rates on all federal student loans.

It is anticipated that HR 5, once passed by the House will be incorporated into an omnibus Higher Education Act reauthorization bill already developed by the Senate Committee.

Back to Top

For more information, contact:

TG Congressional and Legislative Relations
(512) 219-4503
P.O. Box 83100
Round Rock, TX 78683-3100