After months of congressional grandstanding and drama on student loans, a bipartisan group of Senate lawmakers finally has the outlines of an agreement on student loan interest rates. Interest rates on new, subsidized loans for undergraduates jumped to 6.8 percent from 3.4 percent on July 1, and members of Congress have been working feverishly (and often at cross purposes) to reverse that.
The agreement isn’t a done deal, a Democratic Senate aide said. Lawmakers are still waiting for the Congressional Budget Office to make a final determination on the bill’s cost before moving forward.
Way more about what (if anything) all this angst actually means for college access here.
The tentative agreement, which is based on proposals put forth by the Obama administration and House and Senate Republicans, would make interest rates variable from year to year (tied to the 10-year Treasury note). An additional 1.8 percent would be tacked on for undergraduate loans (that would make rates 3.61 percent this year). And an additional 3.4 percent would be added for graduate loans (which would bring them to 5.21 percent this year). PLUS loans, which are taken out by parents would be capped at 4.5 percent (that means rates would be 6.31 percent this year).
The proposal also includes a cap of 8.25 percent on undergraduate loans, and a cap of 9.25 percent on graduate and PLUS loans so that students aren’t stuck if interest rates soar. That’s similar to what House and Senate Republicans—and many Democrats—wanted to see. The administration had initially pushed for an expansion of income-based repayment plans in its budget request.
Both the House and Senate would need to approve the package.
Who supports this tentative deal? Tentatively, a bipartisan group of Senate negotiators, including U.S. Sen. Tom Harkin, D-Iowa, who oversees the panels that deal with education policy and spending, and Sen. Lamar Alexander, R-Tenn., who is the top GOP lawmaker on the panel. Sen. Richard Durbin, D-Ill., the Majority Whip, also worked on the agreement.