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Legislative Update: Sequestration, Student Loan Rates

Congress Asks OMB for Detailed Impact of Sequestration

While there has been much talk about the devastating impact of sequestration on federally-funded programs, there have not been a lot of details to help states and districts prepare. To help increase transparency around this issue, Senators Patty Murray (WA) and John McCain (AZ) recently introduced a bipartisan amendment to the Farm Bill that would require the Office of Management of Budget to submit to Congress a detailed analysis of the impact of sequestration cuts on both defense and non-defense discretionary programs, including education programs like Perkins. Specifically, it would require OMB to provide figures for the number of educator job lost, the number of students no longer able to access education programs, and education resources lost by states and districts. This report would have to be completed within 60 days of the Farm Bill’s passage. If the bill does not pass, the Senators intend to attach the amendment to any future bills that the Senate takes up.

In the House, the Budget Committee unanimously reported H.R. 5872, the Sequestration Transparency Act of 2012. Like the Murray-McCain amendment, this bill would require the Office of Management and Budget to detail how defense and non-defense programs would be affected by the automatic cuts.

Deal Reached on Student Loan Interest Rates

Democrats and Republicans in Congress have reached a deal to prevent the interest rates on student loans from doubling on July 1, 2012. The deal will extend the 3.4 percent interest rate on subsidized Stafford loans for one year. The extension will be paid for through two offsets. First, changes would be made to pension plans. The second, smaller offset would affect students: limiting how long new borrowers could receive in-school interest subsidies to 150 percent of the average time it takes to complete a degree. Currently there are no limits.

The House and Senate are scheduled to vote today on the bill to which this provision is attached. We will keep you updated on any developments.

Nancy Conneely, Public Policy Manager

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