Could College Loan Bill Increase Student Costs?

Career College Central Summary:

  • The student loan bill passed by the Senate last week would bring immediate relief to current college students, but critics are concerned the move could raise borrowing costs in the long run.
  • The bill, which the Senate passed 81-18, would tie student loan rates to the government’s borrowing costs. Rates would be pegged to the 10-year Treasury note, plus 2.05 percentage points for undergraduate students, 3.6 percentage points for graduate students and 4.6 percentage points for parent loans. And that rate would be fixed throughout the life of the loan.
  • But future students could face higher rates if Treasury yields climb as analysts expect them to as the economy improves, critics say. Loan rates could climb to a maximum 8.25% for undergraduate students, 9.5% for graduate students, and 10.5% for loans taken out by parents — all above the current rate of 6.8%

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