Kaine pushes to stop loan rate hike for Va. students | VA Loan After ...

Sen. Timothy M. Kaine, D-Va., says he hopes the Senate will find a way to avoid the automatic doubling of interest rates on undergraduate subsidized Stafford student loans by a July 1 deadline.

?We?re trying to come up with a solution that would enable students to continue to get the education they need to be successful and economically productive without a choking amount of debt,? said Kaine, talking to students and staff at J. Sargeant Reynolds Community College in Richmond on Monday.

If Congress allows a one-year loan-cap extension to expire, the interest rates would jump from 3.4 to 6.8 percent. More than 179,000 Virginia students, including more than 3,000 at J. Sargeant Reynolds Community College, would be affected by the rate increase, costing each student an average of $1,000 annually.

The increase would not affect loan agreements already in place.

Kaine said that the Senate will review five proposals this week, including a measure co-sponsored by Kaine ? the Student Loan Affordability Act of 2013 ? that would keep student loans at their current interest rate, funded by closing a variety of tax loopholes.

?The good news is, there is a lot of discussion going on,? Kaine said. ?I can?t tell you 100 percent that we are going to find a resolution this week, but I can tell you this ? it won?t be any of the five proposals that are on the table right now,? he said.

Instead, the final bill will likely include elements of all five proposals, Kaine said.

Last month, the House passed a bill that would allow lending rates to reset each year, based on the interest rate of a 10-year Treasury note, plus 2.5 percentage points for Stafford loans. Under that measure, loans would be capped at 8.5 percent.

Meanwhile, President Barack Obama has introduced his own proposal, which would also set rates each year based on the Treasury?s borrowing costs, fixed for the life of the loan.

Undergraduate Stafford loans are fixed-rate student loans for students attending a college or university that participates in the Federal Direct Loan Program.

Stafford loans can be used to pay tuition and other eligible school expenses. The loans are not based on credit, and they can be subsidized or unsubsidized depending on the student?s need.

Subsidized Stafford loans are only available to undergraduate students and are interest-free while the student is enrolled at least half time.

?For most of our students that take out loans, this is one of just a few options they have to help finance their college education,? said Kiesha Pope, director of financial aid at J. Sargeant Reynolds Community College.

However, Pope doesn?t believe an interest rise would hurt enrollment.

?I think the students are still going to utilize this source. But what it will mean is that they may end up paying more interest over the lifetime of their loan,? she said.

mschmidt@timesdispatch.com

(804) 649-6537

Source: http://www.timesdispatch.com/news/state-regional/government-politics/kaine-pushes-to-stop-loan-rate-hike-for-va-students/article_07695a3d-182c-5f9e-93ed-18f20b549662.html

Source: http://valoanaftershortsale.org/2013/06/25/kaine-pushes-to-stop-loan-rate-hike-for-va-students/

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