Salmon Introduces Bills to Standardize Interest Rates, Allow Institutions to Mandate Additional Loan Counseling
By Janette Martinez, 2016 NASFAA DME Policy Intern
Last month, Rep. Matt Salmon (R-AZ) introduced two pieces of legislation related to student loans. One bill would allow institutions to require additional loan counseling and would also require annual acceptance of loans. The second bill would standardize interest rates across all federal student loans.
Authorizing Additional Mandated Loan Counseling
H.R. 5481, the Ensure Responsible Borrowing Act, would allow institutions to require loan counseling before disbursing a new loan. This additional counseling would be in addition to existing entrance and exit counseling. Under the bill, institutions can also expand the type of financial counseling provided, such as financial literacy counseling.
The bill would also require borrowers to accept their loans annually by signing a master promissory note, submitting a written statement accepting the loan, or electronically signing a statement accepting a loan before funds can be disbursed.
“In a time with astronomical student loan debt, we need to do all we can to empower students,” said Salmon in a press release. The bill has one co-sponsor, Rep. Grothman (R-WI).
Standardizing Student Loan Interest Rates
Another bill introduced by Salmon, H.R. 5567, the Student Loan Interest Rate Parity Act, would require that all new Federal Direct Subsidized Stafford Loans, Federal Direct Unsubsidized Stafford Loans, and Federal Direct PLUS Loans have the same interest rates. The bill would reduce interest rates on graduate and professional Federal Direct Unsubsidized Stafford Loans and Federal Direct PLUS Loans to match the interest rate of undergraduate Stafford loans.
“It came to my attention many months ago that the student loan interest rates for students seeking graduate degrees are higher than those for undergraduate students, despite the fact that grad students default at a much lower rate,” said. Salmon in a press release. The bill has no co-sponsors.
NASFAA will continue to monitor these bills and others as the 114th Session of Congress comes to close at the end of the year. For a comprehensive list of all student aid-related legislation introduced in the 114th Session, check out the NASFAA Legislative Tracker.
Publication Date: 7/20/2016
Janet I | 7/20/2016 3:44:50 PM
Let's hope this passes, too many students get "sticker shock" upon graduation when the FAAs provide their Exit Counseling information and the reality of what they have borrowed and what their payments will be hits home.
This is not a place to make a "confession" but, ,as a school that gets many transfer in students who are already in debt, we do a "mini" entrance counseling to be sure they are aware of what they have borrowed to date and what they may be borrowing to complete their program with us. It's alarming when only two or three out of ten know what they have borrowed to date, the rest always underestimate.
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