Student Loan Band-Aid Clears Senate, Heads to House
Rates would drop to 3.86%, but start climbing after 2015
By Kate Seamons, Newser Staff
Posted Jul 25, 2013 6:36 AM CDT
Prospective students tour Georgetown University's campus in Washington, in this Wednesday, July 10, 2013, file photo.   (AP Photo/Jacquelyn Martin, File)

(Newser) – According to 81 senators, our nation's student loan woes are one step closer to being eased: They last night voted in favor of a bill that would ensure that undergraduates never face rates higher than 8.25% (grads and parents would be subject to slightly higher caps, at 9.5% and 10.5%), reports the Hill. Students entering school this fall would be able to borrow at 3.86%, down from their current 6.8%. But rates would be tied to 10-year Treasury notes, and would likely begin to climb toward that 8.25% cap after the 2015 academic year, notes the AP.

Some 18 senators, all but one of them Democrat, voted against the bill, with fiscal hawk Elizabeth Warren calling it "obscene. I cannot support a plan that raises interest rates in the long-term while the federal government profits off them." (Per the CBO, the bill would produce $184 billion in profits for the government over a decade; that's about the same amount it would see at a permanent 6.8% rate.) The bill now goes to the House, where a vote is expected before the August recess. Should it get to President Obama's desk, he's expected to sign.