A bipartisan group of senators reached a deal to restore lower student loan interest rates this fall. However, higher rates would be expected in future years.
The agreement by lawmakers comes just one day after they met with President Obama to discuss the situation. While a tentative deal was reached Wednesday, it still must go before a vote.
Student loan interest rates doubled for new subsidized Stafford loans on July 1. Lawmakers on both sides of the aisle called the rate hike senseless. However, they argued over the best way to resolve it, notes USA Today.
Senator Lamar Alexander (R-TN) stated of the Senate’s student loans deal:
“It would save students in 11 million families billions of dollars. We’d like to be able to do this together, and we hope that we can come to a decision right away because families need to make their plans.”
The new plan includes caps on loans to undergraduate students at 8.25 percent. Graduate students would see a 9.5 percent interest cap and adults 10.5 percent, according to CNN.
Senator Tom Harkin, the Democratic chairman of the committee to oversee federal education programs, reportedly agreed to the deal after the caps were included. The House of Representatives has passed its own bill regarding student loans. It would link the rates to the 10-year Treasury note.
The differences between the two bills are expected to be resolved before students return to campuses for fall classes. Student loans aren’t normally taken out until just before classes start, meaning Congress has until mid-August to restore the lower student loan interest rates.
Depending on their financial need, last year’s undergraduates borrowed at either 3.4 percent or 6.8 percent. Meanwhile, graduate students borrowed at 6.8 percent and parents at 7.9 percent. Under the new deal, all undergraduates this fall would borrow at 3.85 percent. Loans for undergraduates will include a 5.4 percent interest rate and parents would see a 6.4 percent rate.
It is unclear when the Senate will vote on the student loan interest rate deal.
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