By EMILY DERUY ABC NEWS
July 25, 2013
Folks, it looks like we finally have a student loan deal.
U.S. President Barack Obama urges Congress to pass legislation that would keep federal student loan rates from doubling during an event in the East Room of the White House June 21, 2012 in Washington, DC. Congress passed a stop-gap measure that year. The Senate passed a more long-term solution on July 24, 2013. (Chip Somodevilla/Getty Images)
The Senate passed a bill Wednesday evening that would tie federal educational loans’ interest rates to the market, and in a seemingly miraculous turn of events, the GOP-led House is set to approve the proposal, as well.
What would that mean for students?
Undergraduates who take out new subsidized Stafford loans this fall would pay about 3.9 percent in interest. Graduate student loans would come with 5.4 percent interest rates. Those new low rates for both undergraduates and graduate students would apply retroactively to any loans taken out after July 1.
Rates on subsidized Stafford loans had doubled to 6.8 percent that day, a development that Congress had hoped to avoid. But partisan bickering stalled their efforts. Now, it appears they’ve worked out a solution.
Interest rates would be tied to 10-year Treasury notes, meaning as the economy improves, interest rates could go up, but only for new loans. The interest rate for each individual loan would remain what it was when the money was first borrowed.
And the bill caps interest rates: Undergraduates wouldn’t have to pay more than 8.25 percent a year in interest, while graduate loans wouldn’t top 9.5 percent.
President Obama praised the bill’s passage in a statement and urged the House to send it to his desk for a signature as soon as possible.
READ MORE HERE: http://abcnews.go.com/ABC_Univision/News/student-loan-deal-set-law/story?id=19769783
Categories: Americas, Economics, United States