Debt & Taxes
Students Exhale as Loan Bill is Passed
Thursday, August 1, 2013 - 1:18pm
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Students heading into their first year of college can finally heave a sigh of relief.

After months of panic from both parties, education trade groups, and of course, students and their parents, the House overwhelmingly approved the Senate's bill that retroactively stops interest rates on subsidized loans from doubling from 3.4 percent to 6.8 percent.

Under the measure, interest rates on subsidized Stafford student loans would be subject to a fixed rate plus the yield on the 10-year Treasury note. That means this year, rates taken out after July 1 would be 3.9 percent. The rates would be capped at 8.5 percent to prevent them from skyrocketing if the economy improves.

The bill now heads to President Obama for his signature.

See the vote here

NEW FIGHT OVER CONGRESSIONAL STAFFERS GETTING OBAMACARE    Sen. Tom Coburn (R-OK) is blocking President Obama's nominee to lead the Office of Personnel Management in an effort to force the White House to provide more details about how congressional staffers would receive insurance through Obamacare.

The New York Times reported earlier this week that a wrinkle in the law forces thousands of congressional aides to get their health coverage through new state insurance exchanges. However, the law doesn't explain how the federal government will continue paying its share of their premiums, which could mean an additional expense of $5,000 each year for individuals and $11,000 for families under the most common plans. - Read more at GovExec

SAME OLD STORY: FED CONTINUES BOND BUYING PROGRAM After its monthly policy meeting on Wednesday, the Federal Reserve said it will continue to purchase $85 billion in bonds each month and will keep the federal funds rate near zero as long as unemployment is above 6.5 percent. Analysts are expecting the Fed to announce that it will begin scaling back its bond-buying program in September if the economy improves. The central bank indicated that it expects inflation to return in the long-term to its 2 percent target. Fed watchers will keep a close eye on Friday's July jobs report for more hints at how the Fed will proceed in the coming months. -  Read more at Yahoo News

OBAMA DEFENDS SUMMERS FOR FED CHAIR    The president on Wednesday defended his former top economics adviser, Lawrence Summers, as a possible successor for Fed Chairman Ben Bernanke.

In a closed-door meeting with House Democrats, Obama praised Summers and rejected complaints that he had not been aggressive enough in seeking economic stimulus funds from Congress in 2009.

The defense came on the heels of a letter sent by 20 Senate Democrats and 37 House Democrats urging him to promote Fed vice-chairwoman Janet Yellen to the top spot. Democrats have voiced the most opposition to Summers, a member of their own party who served as Treasury secretary during the end of the Clinton administration. They have clashed with him over his support of free trade and his past efforts to deregulate the financial industry. In the meeting, Obama made clear that he had not made a final decision on Bernanke's replacement, and said a nomination is not due until the fall.   Read more at Reuters

OBAMA PREPS DEMS FOR BUDGET WAR During that same stop on Capitol Hill, Obama made clear to fellow Dems that he will not negotiate with Republicans over spending or raising the debt-ceiling unless they agree to boost funding for domestic programs. Read more at The Hill 

Washington Correspondent Brianna Ehley, based in D.C., covers Congress, government agencies and spending issues, health care, and tax and economic policy for The Fiscal Times.