Cost Estimate Puts in Doubt Deal Covering Student Loans
Last edited Thu Jul 11, 2013, 09:19 PM - Edit history (1)
Source: New York Times
A tentative agreement to overhaul the federal student loan program was close to collapsing on Thursday night after the Congressional Budget Office said the proposal would cost the Treasury $22 billion over 10 years, according to aides familiar with the discussions.
Negotiators from both parties started the day with high hopes that a deal could be struck next week to restore lower student loan rates — but only after Senate Democrats retreated on their position that subsidized loan rates be locked in for at least another year and not subjected to market forces.
Under the agreement, interest rates for Stafford student loans, which go to low- and moderate-income students, would be tied to the variable rates of the 10-year Treasury bond plus 1.8 percentage points, according to aides for the Senate Democratic leadership. The graduate student rate would be the 10-year Treasury rate plus 3.4 percentage points. The rate in another federal loan program, PLUS, would be the Treasury rate plus 4.5 percentage points.
The deal hewed closely to a plan drafted by the Obama administration and modified in a bill passed by House Republicans. To win over Democrats, it would cap interest rates at 8.25 percent for undergraduates and 9.25 percent for graduate students.
Read more: http://www.nytimes.com/2013/07/12/us/politics/tentative-senate-deal-reached-on-student-loan-rates.html
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Remember how they were supposed to be "temporary?"
Tuesday, June 7th, marked the 10-year anniversary of the passage of the 2001 tax cuts—formally known as the Economic Growth and Tax Relief Reconciliation Act of 2001 or EGTRRA (pronounced "egg-tray" by Washington insiders). Many groups issued shrill press releases to commemorate the event, blaming the lower rates for the deficit and other economic ills facing the country.
While many on the political left rail against the Bush-era tax rates and believe they should be allowed to expire, it is interesting to note that these "temporary" tax rates have been in place longer than the "permanent" Clinton-era tax rates they cut. Indeed, the lower Bush-era tax rates—with a top rate of 35 percent—have been fully in effect for nine years, since the Jobs and Growth Tax Relief Reconciliation Act of 2003 (JGTRRA or "jeg-tray"
was enacted to accelerate the phased-in rate cuts set forth in the 2001 legislation. By contrast, the Clinton-era rates—with a top rate of 39.6 percent—were in effect for just seven years, from 1994 to 2000.
Ironically, before the Bush-era rates expire (again) on December 31, 2012, they will have been in place for 10 years, which will tie the 1954 to 1963 period (with a top rate of 91 percent) for the second longest period of stability for any set of tax rates. The longest any top rate was in effect was the 17 years between 1965 and 1981, when the top rate was 70 percent.
Since it was enacted in 1913, the tax code has been anything but stable. The top rate alone has been changed at least 28 times over the past 98 years (click here for the rates from 1913 to 2011). Remarkably, even the 7 percent top rate enacted in the first income tax code was only in effect for two years.
--more--
http://taxfoundation.org/blog/temporary-bush-tax-rates-now-law-longer-permanent-clinton-tax-rates
Democrats retreated on their position that subsidized loan rates be locked in for at least another year.
Remember, when something gets done, even if it's "temporary," it tends to stay that way...