A bill that links all federal student loan interest rates to U.S. Treasury rates passed the Senate Wednesday. The Bipartisan Student Loan Certainty Act was co-sponsored by Sen. Lisa Murkowski.
“This bill is a big deal not only for young Alaskans and their families, but also for working Alaskans seeking to invest in their future by pursuing additional training or advanced degrees,” Murkowski said in a statement. “All of our college students deserve the lowest loan rates possible and a permanent solution. For too long, we have kicked the can from year to year by providing a temporary patch for some student loans that left us back at square one all too often.”
The act caps federal Stafford loan rates at 8.25 percent for undergraduates and 9.5 for graduates and 10.5 percent for Parent PLUS loans. The new rates are retroactive and apply to loans awarded after July 1.
The rate for federal student loans for low income students doubled to 6.8 percent July 1 after Congress failed to act before the expiration of legislation that had kept the rate lowered. The interest on subsidized Stafford loans — which are awarded to students who meet low income requirements — is paid by the federal government while the student is in school.
Earlier this month, Republicans blocked the Keep Student Loans Affordable Act of 2013, which would have kept the rate for subsidized Stafford loans at 3.4 percent for one more year until a permanent solution could be negotiated. Democrats wanted a one-year fix so that the issue of college affordability and student loan rates could be negotiated when the Higher Education Act comes up for renewal at the end of this year.
Sen. Mark Begich — who was a co-sponsor of the blocked legislation — voted in favor of the Student Loan Certainty Act.
“It’s outrageous that even after today’s vote, big banks still get a better deal on federal government loan rates than we provide to our students,” Begich said in a statement. “I was reluctant to vote for today’s bill because it represents only a temporary fix to the student loan rate crisis. However, I decided some relief in the short term is important to families right now and gives us time to come up with a better permanent solution in the future.”
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