One of the goals from the Obama administration’s budget released earlier this week is to encourage affordability in advanced schooling. Nearly $1 billion of the total education budget will go towards funding programs that will contain college costs and expand research initiatives.
In addition, your budget would take away the power of Congress to manage interest rates on student loans and instead tying them to the market. Although supporters of the move think that this will ensure that this week keep interest rates low and stop them from swinging wildly, opponents think that the market will push the rates higher later on — a move that risks sticking students with unexpectedly high payments.
The budget requires using 10-year Treasury bills because the student loan interest marker.
The interest rate provision isn’t the only real part of the budget that deals with student loans. Another proposal requires expanding the variety of student loan repayments whilst capping monthly payments at 10% of discretionary income.
The current rate for subsidized Stafford loans, which are mainly to low- and middle-income students, is 3.4 percent; that rate is due to double this summer.?This week, Republican Senators Tom Coburn of Oklahoma, Lamar Alexander of Tennessee, and Richard Burr of North Carolina proposed legislation that would have set new education loan rates at the yield on 10-year treasury notes, plus 3 percent. Right now, that will mean mortgage loan of 4.75 percent – higher than the 3.4 percent rate on subsidized Stafford loans but substantially lower than the rates on other student education loans, all of which are in least 6.8 percent.
Although some lawmakers, particularly those on the Democratic side from the aisle, have gone on record praising your budget, the reaction has not been universally positive. Wisconsin Representative and former Vice Presidential nominee Paul Ryan panned the proposal, saying that adopting the President’s budget would grow the deficit while not doing anything to shore up the country’s long-term economic health.
The president\’s finances are such a disappointment because it\’s a missed opportunity,\” Ryan said. \”We need a new method of meet our generation\’s most pressing challenges. I really hope the other side will join us in proposing real reforms – [b]ut for now, we need to take steps in the right direction.\”
Additionally, U.S. Sen. Ron Johnson, R-Wis., said Obama\’s budget did not accurately address the depth from the country\’s problems, for example health-care and social-security spending.
The President’s proposal is not expected to be final and the budget is expected to undergo numerous revision before eventual adoption by each house of Congress and certified with the President’s signature.