Student advocacy groups are turning up the pressure on Congress to keep student loan interest rates at 3.4 percent before they automatically double to 6.8 percent in July. Congress voted to extend them last year in the middle of the 2012 election, but lawmakers have been noncommittal about keeping the low rates this time around.
Should the interest rates rise, the federal government is estimated to bring in $34 billion next year, according to a brief released today by the United States Student Association and Young Invincibles. The advocacy groups argue that the federal government should not be profiting from student loans with so many students buried deep in debt. According to The New York Times, the average borrowers graduate with $27,000 in debt and if the interest rates increase, Stafford loan borrowers will face an average of $1,000 more in loan payments each year.
“While it has long been known that the government makes money on student loans, the numbers in the issue brief are surprising, Terry Hartle, senior vice president of the American Council on Education, told The New York Times. “If the numbers are accurate, the government will make more money on student loans than Ford makes on automobiles… Using student loans to create a profit center is not what anybody intended.” - Read more at The New York Times
SEQUESTER TAKES TOLL ON IRS AMID TAX SEASON The recent budget belt-tightening at the Internal Revenue Service is already wearing on the agency and will likely cause tax refunds to be delayed by a month the National Treasury Employees Union warned in a statement Monday.
Over the past two years, the IRS has cut 8,000 full-time jobs and trimmed $1 billion from its budget, including the $600 million in sequestration cuts that just took effect last month, on top of the $305 million reduction in its 2012 budget.
The NTEU said taxpayer assistance centers across the country are now staffed at half the level they were eight years ago, and many of the centers have only one or two employees, causing long lines and lengthy wait times. - Read more at Government Executive
OBAMA TRIES TO BLUNT PAIN FROM CPI PROPOSAL In his budget to be unveiled Wednesday, President Obama will propose slowing the growth of Social Security and other benefits through chained CPI, while including protections for low-income seniors and veterans. The extent of these protections could be crucial for calming down concerned Democratic lawmakers who oppose the less generous inflation metric. White House officials told The Wall Street Journal that other protections would be included as well, but wouldn’t provide more details until Wednesday. - Read more at The Wall Street Journal
STATES PAY LAWYERS TO PRACTICE IN RURAL AREAS Last month, South Dakota became the first state to pass a law offering lawyers a subsidy to live and practice in rural areas, similar to what doctors, nurses and dentists currently receive. More and more states are considering this, since there aren’t enough lawyers in rural areas, in contrast to the majority of lawyers who flock to big cities to compete for the few jobs still available. South Dakota’s law goes into effect in June and requires a five-year commitment to stay in the state in order to receive an annual subsidy of $12,000. - Read more at The New York Times
NEW WALL STREET WATCHDOG: MARY JO WHITE The Senate unanimously approved Mary Jo White on Monday to lead the Securities and Exchange Commission (SEC). White breezed through her confirmation to replace former SEC head, Mary Shapiro and interim SEC Commissioner Elisse Walter. - Read more at The Hill