Student Loan Interest Rates
Senate approves legislation to lower interest rates and protect borrowers
By Teresa Seger
Before the looming July 1, 2013, deadline, APA members took action in the debate over student loans. At the beginning of June, the Education Government Relations Office issued an Action Alert asking members to contact their respective members of Congress in support of affordable interest rates on graduate student loans. Thanks to the tremendous advocacy efforts of APA members, nearly 1,500 individuals generated over 4,400 messages to their senators and representatives on this issue.
Although Congress was unable to reach a compromise before rates doubled on July 1, a bipartisan group of senators struck a deal mid-July. Senate negotiators agreed on a proposal to set interest rates to the 10-year Treasury note, plus 2.05 percent for both the subsidized and unsubsidized portions of the undergraduate loans, plus 3.6 percent for graduate loans and plus 4.6 percent for Direct PLUS loans.
Currently, the rate for graduate student loans is set at 6.8 percent. Under this legislation, the estimated interest rate is 5.4 percent for graduate student loans issued in the upcoming school year. However, the rate will fluctuate with the 10-year Treasury note. To protect student borrowers from volatile markets, those rates would be capped at 8.5 percent, 9.5 percent and 10.5 percent, respectively.
Crafted by Senators Tom Harkin, D-Iowa; Joe Manchin III, D-W.Va.; Thomas R. Carper, D-Del.; Angus King. I-Maine; Lamar Alexander, R-Tenn.; Richard M. Burr, R-N.C.; and Tom Coburn, R-Okla., the proposal (S. 1334) was brought to the floor on July 24 and passed with significant bipartisan support (81-18) as an amendment to the Smarter Solutions for Students Act (H.R. 1911). The legislation returned to the House and passed (392-31) under a procedure known as "suspension of the rules" on July 31.
The newly amended Bipartisan Student Loan Certainty Act of 2013 (H.R. 1911) will now be sent to the president’s desk where it is expected to be signed into law.
The Education Government Relations Office and APAGS extend our thanks to those who took the time to make their voices heard in this debate and look forward to engaging with members on this and other important advocacy issues in the future.