Bill Text: CA AJR20 | 2013-2014 | Regular Session | Chaptered

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Bill Title: Federal Direct Stafford Loans: interest rates.

Sponsorship: Partisan Bill (Democrat 1)

Status: (Passed) 2013-08-05 - Chaptered by Secretary of State - Res. Chapter 66, Statutes of 2013. [AJR20 Detail]

Download: California-2013-AJR20-Chaptered.html

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BILL NUMBER: AJR 20	CHAPTERED
	BILL TEXT

	RESOLUTION CHAPTER  66
	FILED WITH SECRETARY OF STATE  AUGUST 5, 2013
	ADOPTED IN SENATE  JUNE 24, 2013
	ADOPTED IN ASSEMBLY  JUNE 27, 2013
	AMENDED IN SENATE  JUNE 14, 2013

INTRODUCED BY   Assembly Member John A. P�rez

                        MAY 13, 2013

   Relative to student loan interest rates.


	LEGISLATIVE COUNSEL'S DIGEST


   AJR 20, John A. P�rez. Federal Direct Stafford Loans: interest
rates.
   This measure would request that the Congress and the President of
the United States enact legislation that prevents the doubling of
interest rates for Federal Direct Stafford Loans and creates a
long-term legislative solution to maintain affordable and reliable
federal student loan rates while preserving funding for other federal
educational programs and benefits.



   WHEREAS, Just last year, Congress passed, and President Obama
signed, an extension to maintain the interest rate for Federal Direct
Stafford Loans at 3.4 percent through June 30, 2013; and
   WHEREAS, On July 1, 2013, unless actions are taken, the interest
rate for Federal Direct Stafford Loans will double from 3.4 percent
to 6.8 percent; and
   WHEREAS, This higher interest rate level is the same level that
graduate students and unsubsidized loan borrowers pay, which could
limit access to California's public postsecondary educational
institutions by dissuading students from using loans to help pay for
their postsecondary education; and
   WHEREAS, The average student loan borrower graduates with a debt
of $27,000, and the scheduled interest rate increase for Federal
Direct Stafford Loans would cost almost 10 million borrowers
approximately $1,000 more per year of education over the life of a
loan; and
   WHEREAS, Raising the interest rate for Federal Direct Stafford
Loans will make it even harder for college graduates facing an
already difficult postgraduation job market to repay their loans; and

   WHEREAS, Student loan debt affects Americans of all ages, as 45
percent of all American families hold outstanding student loan debt,
including 36 percent of families in households headed by a person 45
to 54 years of age, inclusive, 29 percent of families in households
headed by a person 55 to 64 years of age, inclusive, and 13.3 percent
of families in households headed by a person 65 to 73 years of age,
inclusive; and
   WHEREAS, Student loan debt has a ripple effect on the economy, as
two million more adults 18 to 34 years of age, inclusive, live in a
household headed by their parents; and
   WHEREAS, Each new household leads to an estimated $145,000 of
economic growth, suggesting that a delay in household formation could
be slowing broader economic growth; and
   WHEREAS, The Bipartisan Policy Center estimates that Echo
Boomers--those born between 1981 and 1995--will account for 75
percent to 80 percent of owner-occupied home acquisitions by 2020,
yet the current homeownership rate for young people is among the
lowest in decades while mortgage interest rates are at historically
low levels; and
   WHEREAS, Student loan debt also has a significant impact on
retirement, as 62 percent of workers 30 to 39 years of age,
inclusive, 20 percent of whom hold more than $50,000 in student loan
debt, are projected to have insufficient resources for retirement;
and
   WHEREAS, According to the Congressional Budget Office, the federal
government makes 36 cents in profit for every dollar it lends to all
student borrowers, and student loans are estimated to bring in $34
billion next year alone; and
   WHEREAS, Higher education loans should be used to subsidize the
cost of higher education, not to be used as a source of profit for
the federal government; and
   WHEREAS, Federal Direct Stafford Loans have been a critical
component, in addition to other forms of financial aid, for low- and
middle-income students working towards a postsecondary degree, and
over two-thirds of student loan borrowers are from families with
annual incomes under $50,000; now, therefore, be it
   Resolved by the Assembly and the Senate of the State of
California, jointly, That the Legislature respectfully requests that
the Congress and the President of the United States enact legislation
that prevents the doubling of interest rates for Federal Direct
Stafford Loans and creates a long-term legislative solution to
maintain affordable and reliable federal student loan rates while
preserving funding for other federal educational programs and
benefits; and be it further
   Resolved, That the Chief Clerk of the Assembly transmit copies of
this resolution to the President and Vice President of the United
States, to the Speaker of the United States House of Representatives,
to the Majority Leader of the United States Senate, and to each
Senator and Representative from California in the Congress of the
United States.