- A student loan rate deal reached by a bipartisan group of Senators late Wednesday would connect interest rates on federal student loans with the U.S. government's cost to borrow, subsidizing immediate cost reductions with future cost increases for graduate students and parents.
- The proposed deal would see interest rates on new student loans from the U.S. Department of Education connected to the 10-year Treasury note's yield, with undergraduates paying 1.8% more than the government's borrowing cost for 10 years, while graduate students would pay 3.8% more and parents would pay an extra 4.5%.
- Bloomberg reported the yield at 2.57% late Wednesday, so most students starting this fall, as well as their parents, would pay lower borrowing costs than rates from the last school year--though rates would be expected to rise during the next three years, subsidizing the immediate savings.
From the article:
... Many Senate Democrats have been reluctant to support the measures, in part because of the possibility that future students would pay much higher rates than they do under current law.
“Congress must preserve its historical commitment to protecting students from outrageous interest rates now and in the future,” Harkin, chairman of the chamber’s education committee, said last month through a spokeswoman. ...