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In Congress

Tax Bill Extends Student Loan Tax Deduction

As part of the recent tax-cut compromise passed by Congress, the student loan interest tax deduction worth up to $2,500 has been extended through 2012. Other higher-education related provisions of the tax bill include:

Extension through 2011 of the above the line college tuition deduction of up to $4,000.
Renewal through 2012 of a benefit that lets employers provide up to $5,250 in tax-free tuition assistance to their employees.
Continuation through 2012 of the American Opportunity Tax Credit that provides a maximum credit of $2,500 for qualified tuition and related expenses for each eligible student.
Renewal through 2012 of a tax provision that would allow individuals to continue to contribute up to $2,000 a year, pre-tax, to Coverdell Education Savings Accounts.
Renewal through 2011 of the Individual Retirement Account (IRA) Charitable Rollover.

The Dream Act Fails

The Senate failed to pass the Development, Relief and Education for Alien Minors (DREAM) Act, a bill that would provide a path to citizenship for immigrants who came to the country as children and serve in the military or attend a 4-year college for at least 2 years. Under the Act, an alien who adjusts to lawful permanent resident status would have qualified for federal student loans and federal work-study only.

Kline Officially Named Chair of House Education and Labor Committee

Rep. John Kline (R-MN) was officially selected to serve as Chairman of the U.S. House Education and Labor Committee in the 112th Congress. Kline, who was first elected to Congress in 2002 and is currently the committee’s Senior Republican Member, issued the following statement:

“Job creation and American competitiveness are vital national priorities. As Chairman, I will ensure they are at the forefront of the Education and Labor Committee agenda. I am humbled by the decision of my colleagues to allow me to lead this panel, and I am eager to move forward with an agenda that fulfills our pledge to create a smaller, more accountable federal government. My goal for the federal programs and agencies that oversee our schools and workplaces is to provide certainty and simplicity. We must ensure federal red tape does not become the enemy of innovation, and that federal mandates do not become roadblocks on the path to reform.”

Private Student Loan Transparency

A companion bill to legislation approved by the House this past September was recently introduced by Senator Frank R. Lautenberg (D-NJ). The Christopher Bryski Student Loan Protection Act (S. 3996), would “amend the Truth In Lending Act and the Higher Education Act to bring greater transparency to the student loan process for students, their parents, and other loan cosigners.”

The bill would require private student loan lenders to provide disclosures to potential borrowers and cosigners about the creation of a durable power of attorney to make financial decisions in a situation where the borrower might be incapacitated. It also requires schools and lenders to provide clear and conspicuous language about any death or disability discharge options and a cosigner’s obligations if the primary borrower should pass away or become incapacitated. The parents and brother of Christopher Bryski have been advocating for such a bill since the Rutgers college student suffered a traumatic brain injury in an accident several years ago. Bryski ultimately passed away due to his injuries after spending 2 years in a coma. His parents had cosigned on several private student loans for the student, which they are now being forced to pay as private student loans often have no death or disability discharge provisions.

In a related story, Wells Fargo has changed the terms of its private student loan agreements and will now forgive these loans if a student beneficiary dies or is permanently disabled.

In the News

College Debt Crisis Program to Air on CNBC

“Price of Admission: America’s College Debt Crisis,” a program that will focus on the impact of student loan debt, will air on CNBC on Tuesday, December 21st at 9:00 p.m. EST and again on Sunday, December 26th. According to the program’s description, borrowers, lenders, school administrators and families will be interviewed to discuss the real price of admission to higher education. Education Secretary Arne Duncan will discuss whether he’s concerned about the current student loan system.

Student Loans Push Up Consumer Debt

Student loans pushed up consumer debt in October by the largest amount in more than 2 years, the Federal Reserve has just reported. So-called non-revolving debt, which includes education loans, jumped 6.75%, while credit cards debt continues to decline, falling 8.5%. Overall, consumer credit rose 1.75%.

Pew Report Finds College Borrowing Rose 50% over Last Decade

A new report from the Pew Research Center shows that graduates who received a bachelor’s degree in 2008 borrowed 50% more (adjusted for inflation) than those who graduated in 1996, while graduates who earned an associate’s degree or undergraduate certificate in 2008 borrowed more than twice what their counterparts in 1996 had borrowed.

Healthier Job Market Predicted for College Grads

The Collegiate Employment Research Institute at Michigan State University recently released an analysis that predicts overall hiring will increase by 3%, but bachelor’s level and M.B.A. level hiring will go up by 10%.

Kantrowitz Report Shows Undergraduate Debt Impact on Graduate School Attendance

A new report from Mark Kantrowitz, publisher of FinAid.org and Fastweb.com, finds that bachelor’s degree recipients who graduate with no undergraduate student loan debt are 70% more likely to enroll in graduate and professional school than students who graduate with some debt.