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

(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.

Prospective students tour Georgetown University's campus in Washington, in this Wednesday, July 10, 2013, file photo.
Prospective students tour Georgetown University's campus in Washington, in this Wednesday, July 10, 2013, file photo.   (AP Photo/Jacquelyn Martin, File)
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