After a summer of failed bills and crushed compromises, it appears Congress will address federal student loan interest rates very soon.
The latest progress began when the Senate passed a compromise bill on July 24. The bill will tie interest rates for new federal student loans to the interest rates of 10-year Treasury notes, and will affect all federal student loans, subsidized and unsubsidized. For the first year, all new undergraduate Stafford loans will have an interest rate of 3.86 percent, with graduate Stafford loans at 5.4 percent and PLUS loans (for graduate students and parents) at 6.4 percent. Interest rates would be locked for the life of the loans.
In the case that interest rates rise dramatically, all undergraduate loans would be capped at 8.25 percent, graduate loans at 9.5 percent, and PLUS loans at 10.5 percent. Currently PLUS loans are at 7.9 percent.
This appears to be a more permanent solution, especially because it addresses both subsidized and unsubsidized loans. Earlier in the summer it was the subsidized loans that got all the attention, with both sides of the aisle claiming the trendy hashtag #dontdoublemyrate – referring to the double subsidized rates that occurred after the July 1 deadline.
Being that the House and Senate bills differ only slightly, it appears that a deal will be struck and passed by both chambers. Many Democrats, including leadership, expressed disappointment with the bill.
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