Posted by AzBlueMeanie:
So Congress finally approved a student loan bill, designed with the 2014 election in mind — it keeps rates low now to get past the election, but the adjustable market rate will take effect in future years. Democrats went along with this compromise bill with the intent of "tweaking" it in future years. Since the previous law had expired on July 1, action had to be taken now. House
approves deal that would save students millions in loan fees:
The millions of college students and parents who will borrow money
from the federal government for the coming school year can plan on much
lower interest rates than originally offered, as the U.S. House
overwhelmingly voted 392 to 31 on Wednesday to approve a Senate plan
that would allow interest rates to move with the financial markets.
The plan now goes to President Obama, who has already voiced
support. House Republican leaders have deemed this a long-term solution,
while many Democrats have said this plan will probably need tweaking in
Undergraduates who take out federal loans for the coming school year
can expect an interest rate of 3.86 percent, while the rate for graduate
students will be 5.41 percent. The interest rate for PLUS loans,
available to graduate students and parents of students, will be 6.41
percent. All of those rates are lower than current fixed rates of 6.8
percent for Stafford loans and 7.9 percent for PLUS loans. [Due to expiration of the law on July 1.]
rates will apply to loans taken out since July 1 and will lock in for
the lifetime of the loan. The plan calls for limits [caps] on how high the
rates can go: 8.25 percent for undergraduates, 9.5 percent for graduate
students and 10.5 percent for PLUS loans. If the economy improves, rates
on future loans are expected to surpass the current rates. Democrats
have said they hope to again take action before that happens.
Only Rep. Raúl Grijalva among Arizona's congressional delegation voted against the compromise student loan bill. “This bill means students will pay $715 million more down the road
than they would if current rates, which recently doubled for new
borrowers, stayed untouched," Grijalva said in a prepared statement.
"Today we reverse the July 1 student loan interest rate hike at the cost
of ultimately charging students more over the next decade."