Collegiettes worrying about a surge in student loan interest rates can breathe a sigh of relief.
A bipartisan bill to reduce student loan interest rates for 7 million students passed through the House on Wednesday night and now awaits President Obama’s signature to turn into law.
Spearheaded by Sen. Joe Manchin, D-W. Va., and Lamar Alexander, R-Tenn, the bill would lock in interest rates for undergraduates at 3.9 percent next year. Graduate students would be able to borrow at 5.4 percent, and parents at 6.4 percent.
The bill applies only to government subsidized Stafford loans, which cover 7 million students each year.
The bill is a bipartisan compromise to keep loan interest rates from doubling to 6.8 percent on July 1 after being lowered and frozen by Congress six years ago. Senate Democrat initially argued to extend the 3.4 percent for another year, while House Republicans preferred a “longer term solution” to keep rates low and allow them to rise with market rates in the future.
The bill now caps undergraduate loan interest rates at 8.25 percent, graduate rates at 9.5 percent, and parent rates at 10.5 percent.
Obama is expected to sign the bill into law soon, as he had previously expressed support for it. “It meets the key principles I laid out from the start,” he said to NBC News. “It locks in low rates next year, and it doesn’t overcharge students to pay down the deficit. ”
Nevertheless, opposition consisting mainly of democrats remains. Most, like Sen. Elizabeth Warren, D-Mass., argue the bill doesn’t do enough, because it could still rise to be as high as 10.5 percent, which is higher than the original 6.8 percent.