Political
KUTV.com | Stories - Congress Okays Student Loan Deal
Wednesday, July 31 2013, 08:01 PM MDT
Congress Okays Student Loan Deal
By Jennifer Liberto

WASHINGTON (CNNMoney) -- The House on Wednesday approved a bipartisan that ensures lower interest rates on loans for students heading to college this fall.

Members of the House voted 392 to 31 to lower rates for undergraduates taking out government loans this school year to 3.86% -- cheaper than the 6.8% interest rate that kicked in on July 1. The new rates would be retroactive and apply to loans taken out after July 1.

The bill, which passed the Senate last week, will now go to the President Obama's desk to be signed into law.

It has provisions for rates to go higher in coming years.

As House members debated the bill, many Republicans took credit for the deal. They noted that the Senate version wasn't much different from their own student loan bill, which linked rates to the bond markets.

"My colleagues and I have been fighting for months for a long-term market-based solution that will serve students and taxpayers, and the legislation before us today will do just that," said Minnesota Republican John Kline, who runs the House education panel.

The new rule doesn't apply to loans that students get from private lenders. It only affects Stafford loans, which are made by the U.S. government to help finance a college education.

On July 1, the interest rate on subsidized Stafford loans doubled from 3.4% to 6.8%, affecting 7.4 million students. The subsidized loans are based on financial need and account for about 26% of all federal student loans, according to the Congressional Budget Office.

Unsubsidized loans and graduate loans were already paying 6.8% interest rates.

The latest bill helps all students, with the basic principle being that it ties student loan rates to the bond markets.

This fall, undergraduate students will pay an interest rate of 3.86% on their loans. It is comprised of the yield on the 10-year U.S. Treasury note on June 1, plus an additional 2.05%. Graduate students will have to pay 5.41% on loans this fall, or 3.6% over the 10-year Treasury.

If rates on Treasury notes rise, so would student loan rates under the new deal.

However, the bill makes provisions to protect students if bond yields were to spike. Loans for undergraduates will be capped at 8.25% and for graduates at 9.5%.

Over 10 years, the interest that government collects on student loans is expected to raise $715 million. It will go toward reducing deficits.

The Obama administration has been pushing for the deal, even though left-leaning Democrats opposed the bill for hiking rates in coming years.

Student loan debt has skyrocketed in recent years, as have delinquencies, making it a pressing political and financial issue for millions of Americans. Many students graduate from college deep in debt and without jobs. It is second only to mortgages as the largest debt that consumers carry. In 2011, students on average owed nearly $27,000 in loans.

-- CNN's Ted Barrett and Deirdre Walsh contributed to this piece.Congress Okays Student Loan Deal

News Photos & Videos - Submit Your Photos Here


More Political Stories

Another N.J. Bridge Controversy Brewing, and a Familiar Name Surfaces
McCain Calls Russia a Gas Station
Meet the Woman Who Could Turn Texas Purple
Obamas Open up South Lawn to Eager Children for Easter Egg Roll
Warren Repeats She's 'not Running for President'
Millions Slip Into Obamacare 'Coverage Gap'
High Court to Hear Dispute About TV Over Internet
Is Justin Bieber Getting Special Treatment?
Kansas Speech by Michelle Obama Draws Complaints
Baucus Casts Wide Shadow Over Montana Senate Race
Spokeswoman: Sebelius Not Considering US Senate
Obama Praises Biden, But Doesn't Endorse for 2016
Chris Christie, Prosecutor Appear at Same Event
Prop 8 Lawyer's Views on Gay Marriage Evolving
Arkansas Voter ID Law Challenged in Court by ACLU
Defend 'Obamacare' Unabashedly, Some Democrats Say
Mitt Romney Stars in Campaign Ad
Landrieu Faces Her Toughest Political Storm to Stay in Senate
Big Bucks an Indicator of Outside Groups' Influence
Sen. Ted Cruz: Too Early to Worry About 2016
Obama, Biden to Announce Millions for Job Rraining
House Democrats' Committee Sitting on $40M Fund
Feds Charge Woman in Hillary Clinton Shoe-Throw
Landrieu Touts Fight for Oil and Gas Jobs in New Ad
These Races Will Determine Control of the Senate
Michelle Obama -- and First Dogs -- Visit Military Families on Walter Reed Campus
Will Chelsea Clinton go Into The Family Business?
US Senator McCain Mocks EU's Russia Sanctions
Rand Paul: Hillary Clinton 'as Bad or Worse' Than President Obama on Government Surveillance
2016 Watch: O'Malley Heads to Nevada
First on CNN: Christie's Interview with Investigators
Obama Marks Holy Week, Reflects on Kansas Shooting
Hillary Clinton to Address International Jewish Group
2 Congressmen Have Questions in Jill Kelley Leak
Paul Ryan to Iowa GOP: Give up 'Infighting' for Lent
Sebelius' Resignation and the Politics of Obamacare
Occupy activist's police-assault trial opens in NY
GOP Blocks 'Paycheck Fairness' Bill in Senate
Democrats Top GOP Last Month in Senate Cash Battle
Political Drama "Camp David" Chronicles Messy Path to Peace
Hagel: Russia Causing Itself Long-Term Harm With Ukraine Steps
Bill Clinton on Snowden: An 'Imperfect Messenger'
First on CNN: Graham Opponent Has Impressive Fundraising Haul
Army's Ban on Deadlocks; Other Styles Seen as Offensive to Some African-Americans
Sharpton Denies Any Wrongdoing in FBI Informant Role
Alan Gross, Held in Cuba for Four Years, Launches Hunger Strike
Husband on Kissing Congressman: 'He Has Wrecked my Life'
Farewell, Archie: Beloved Comic Book Character to Die
U.S. Navy Ship to Arrive in Black Sea by Thursday
Huckabee Back in Iowa
Many Doubt 1964 Civil Rights Act Could Pass Today
Pelosi: Cheney is 'Proud' of Bush-era CIA That Misled Public
Democrats Highlight Equal Pay in Political Push
Justices Reject Review of Case Concerning Religious Liberty in The Marketplace
Brown to Formally Jump Into Senate Race
Obamas to Attend Fort Hood Memorial
Ted Kennedy Jr. to Run For Connecticut Senate
Poll: Rate of Uninsured Americans Drops
Inside Politics: Democrats' Good Week
Oops Moment For Senator: He Shows Up at Wrong Hearing
Advertise with us!

Washington Times

Washington TimesThe Washington Times - Politics, Breaking News, US and World News.

Click Here for more!


 

Pay It Forward
Fresh Living
Family Matters
Road Trippin
Hooked On Utah

Advertise with us!