WASHINGTON — Students’ wait for a congressional fix for the July 1 hike on their federal student loan rates appears to be nearing an end, with the Senate passing a bill this week to lower the rates and House Republicans supporting the Senate version.
The Senate voted 81-18 late Wednesday to pass bipartisan legislation that would immediately lower the interest rates on the federal Stafford loans. President Barack Obama and the House expressed support for the bill, which makes it likely to become law after months of congressional debate.
The Stafford loan rate had been 3.4 percent but, without congressional intervention to stop it, the rate doubled to 6.8 percent on July 1.
The Senate plan would tie the student loan rates to the 10-year Treasury note. For borrowers this fall, the rates would be roughly 3.9 percent for undergraduates, 5.4 percent for graduates and 6.4 percent for parents.
Senate education committee Chairman Tom Harkin cited a projection by the Congressional Budget Office that the rates won’t exceed 7 percent for five years.
“This is the best that we could do and a compromise for students, given all the various priorities of this side and that side and the White House and everybody else,” Harkin, D-Iowa, said.
Obama called the Senate’s bill “a major victory for our nation’s students.” House Speaker John Boehner tweeted he was “pleased Senate Dems finally joined GOP & passed bill to provide permanent, market-based solution.” In fact, the House had passed a bill in June that contained many of the provisions of the Senate bill, but it didn’t gain Senate approval.
Harkin argued that Republicans’ proposals would have added $15.6 billion in student loan debt over 10 years, while the final Senate bill reduced that amount to $715 million.
Opponents – mainly liberal Democrats – reiterated the bill’s future rate hikes are too high. A rate cap of 8.25 percent included in the bill was not low enough for some lawmakers, such as Sens. Jack Reed, D-R.I., and Elizabeth Warren, D-Mass. The pair proposed a 6.8 percent cap in an amendment, which failed to pass the Senate Wednesday.
“I won’t support a teaser rate on student loans that raises interest rates and squeezes even more profits out of our kids. This is a bad deal,” Warren tweeted.