Congress seems no closer to resolving the politically sensitive issue of student loan interest rates, as a proposal from Senate Democrats which included the so-called “stretch IRA” revenue raising provision was rejected July 10 by a 51-49 vote. (Sixty votes were needed to pass.)
The “stretch IRA” provision would require non-spouse beneficiaries of retirement account owners to take distribution of those inherited assets over no more than five years (with limited exceptions), to pay for the bill. (The “stretch IRA” proposal as introduced in the legislation is a misnomer because it would apply to qualified plans as well as IRAs.) It remains to be seen how this issue will be resolved in the coming weeks, but it is a possibility that the “stretch IRA” pay-for provision could be included in any compromise legislation.
Under current law, interest rates on millions of subsidized federal student loans doubled from 3.4% to 6.8% on July 1, 2013. Republicans in the House have already passed a bill that would permanently peg student loan rates to Treasury notes and cap the loan rate at 8.5%. President Obama has threatened to veto that bill.
Andrew Remo is ASPPA’s Congressional Affairs Manager.
