Senate Republicans: No one-year return to lower student loan interest rate
- The student loan stalemate on Capitol Hill continued today as Senate Republicans voted 51-49 against Democratic legislation aimed at reducing the interest charged on new subsidized Stafford loans back to 3.4% for one year.
- The loan rate doubled to 6.8% last month after Republicans blocked a measure to extend the 3.4% rate for two more years, favoring instead a House-passed proposal that would tie student loan rates to 10-year Treasury note yields.
- Connecting loan rates to the Treasury yield was also proposed by President Barack Obama, and while the House plan would charge 2.5% more than the yield and put a cap on the rates at 8.5%, a bipartisan group of six senators has proposed a version that would see both subsidized and non-subsidized Stafford borrowers paying 1.85% more than the yield.
From the article:
... Proponents of that bill such as Tennessee Republican Lamar Alexander argue that it would do more to benefit middle-income students because all Stafford loan borrowers taking out undergraduate loans would get the same rate.
Senate Democrats are seeking additional protections against increases in students’ borrowing costs. ...
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