House Clears Lower Rates On Student Loans
Career College Central summary:
A bipartisan bill that would reduce the costs of borrowing for millions of students passed the House this week and was heading to President Barack Obama for his signature.
The legislation links student loan interest rates to the financial markets, offering lower rates for most students now but higher ones down the line if the economy improves as expected. Even as they were preparing to pass the bill, many lawmakers were already talking about a broader overhaul of the nation's colleges to curb fast-climbing costs.
Undergraduates this fall would borrow at a 3.9 percent interest rate for subsidized and unsubsidized loans. Graduate students would have access to loans at 5.4 percent, and parents would borrow at 6.4 percent. The rates would be locked in for that year's loan, but each year's loan could be more expensive than the last. Rates would rise as the economy picks up and it becomes more expensive for the government to borrow money.
But for now, interest payments for tuition, housing and books would be less expensive under the House-passed bill.
The House earlier this year passed legislation that is similar to what the Senate later passed. Both versions link interest rates to 10-year Treasury notes and remove Congress' annual role in determining rates.
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THE ASSOCIATED PRESS