Wednesday, July 24, 2013

Senate has Struck a Deal on Student Loans-But Rates Still Go Up!

The Senate is likely to vote this week on the issue of student loan rates. There is a concern that the deal will not reduce the loan rate back to the previous 3.4% it was fixed at and also tie the rates to market fluctuation.

Federal student loans will be calculated and fixed to the interest rates on the 10-year Treasury bill. Undergraduates will pay an additional 2.05% with an 8.25% interest rate cap; graduate students will pay an additional 3.6% with a 9.5% interest rate cap; and PLUS loans, which mainly affect parents of college students, will have an additional 4.6% with a 10.5% interest rate cap.

Under this program, all undergraduates this fall would borrow at 3.85% interest rates. Graduate students would have access to loans at 5.4%, and parents would be able to borrow at 6.4 %.

Students need the ability to borrow for higher education without the concern that the market changes could send their interest rates soaring, possibly making repayment of those loans impossible.

Please ask the Senate to reconsider this deal.

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