Congress Passes New Student Financial Aid Bill with Caps on Interest Rates!

Dear Commons Community,

Last week I posted on the debate going on in Congress regarding student loan rates and a version of the bill that passed the U.S.  Senate called for variable interest rates that would rise with the market.  While interest rates are low now and current students would not be affected, future students and their families were at risk of having to repay loans at significantly higher rates.  Happily, the final version of the bill that passed the U.S. House of Representatives yesterday, included a cap on interest rates.  As reported in the New York Times:

“Rates for loans taken out after July 1 of this year would be 3.9 percent for undergraduates, 5.4 percent for graduate students and 6.4 percent for those receiving PLUS loans.  The rates are fixed over the life of the loan but would change for new borrowers each year.

In a compromise that pleased many Democrats who had initially been wary of using a rate that was subject to inflation and fluctuated with the markets, Congress set a cap on all loans: 8.25 percent for undergraduates, 9.5 for graduate students and 10.5 for PLUS recipients.”

The new version of this bill was passed by both houses of Congress and is expected to be signed by the President.  This is a much better deal for our future students and their parents.


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