Lawmakers reach tentative deal on student loan rates

Tim Goral's picture

A little more than two weeks after the interest rates on federal subsidized Stafford student loans jumped from 3.4 percent to 6.8 percent, a tri-partisan group of senators reached a compromise to lower interest rates for borrowers who have taken out or will take out federal student loans after July 1, 2013.

The proposal, known as the Bipartisan Student Loan Certainty Act, which was introduced on July 17 by US Senators Joe Manchin (D-WV), Richard Burr (R-NC), Angus King (I-ME), Tom Coburn (R-OK), Tom Carper (D-DE), Tom Harkin (D-IA), Lamar Alexander (R-TN), and Dick Durbin (D-IL), requires that for each academic year, all newly issued student loans be set to the US Treasury ten-year borrowing rate plus add-ons to offset costs associated with defaults, collections, deferments, forgiveness, and delinquency.

"This compromise is a win-win for both students and taxpayers," Coburn said in a written statement. "Tying interest rates to the market allows students to take advantage of historically low rates while ensuring taxpayers will not have to foot the bill for arbitrary rates set by Congress."

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