The Houses Manages to Pass A Bill on Student Loans


Don Sholl/Flickr CC

  After dangerously allowing student loan interest rates to double this summer, congress has overwhelmingly passed a bill that ties student loan rates to the financial markets, meaning that the interest rates are low now, but will increase as the economy improves.  The 392 to 31 vote links loan rates to ten year treasury notes and removes the annual interest rate setting from congress.  In spite of the fluctuations, the interest rate for undergraduate students would be capped at 8.25 percent, a compromise insisted on by democrats in order to keep rates from getting out of control.  The strategy follows an official position by the White House, and the president is expected to sign the bill into law soon.

  The caps are not satisfying to consumer advocate groups, who criticize the bill by saying it does not provide protections for interest rates to stay below the 6.8 percent that it doubled to in early July.  A representative from US PIRG said that if another bill isn’t passed students will end up paying more than if congress has remained in dead lock.  Lawmakers in both parties, however, are heralding the bill as a victory, even though some of them have already expressed interest in revising the student loan policy this fall when congress works on rewriting the Higher Education Act.

  Massachusetts Senator Elizabeth Warren spoke out very strongly against tying interest rates to financial markets, saying that it would create a billion dollars in profit off of the back of students trying to find their way in life.  She says the reduction in deficit derived from the loan rates means that they exploiting students in order to make up for financial mismanagement. 

 

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