Sen. Angus King recently joined his colleagues in Washington in getting some relief for students taking out loans to pay for college.
Last week, the Senate passed the Bipartisan Student Loan Certainty Act by a vote of 81-18, which, according to King, will provide a long-term solution that lowers student interest rates for everyone.
“Our legislation offers a long-term, market-based solution that lowers and caps interest rates for all students taking out a loan and finally gets Congress out of the business of setting rates,” King said in a prepared statement. “It also provides our students and their families with the financial certainty they need to plan for the costs of higher education. We were sent here to solve problems, and the negotiations that resulted in this bipartisan compromise solution exemplify exactly how Congress can and should work for the country.”
The act requires that, for each academic year, all newly issued student loans be set to the U.S. Treasury 10-year borrowing rate. For loans taken out after July 1 of this year, that rate would be 3.86 percent for subsidized and unsubsidized loans for undergraduate students, 5.41 percent on unsubsidized loans for graduate students, and 6.41 percent on PLUS loans for parents and graduate students.
These rates will apply retroactively to newly issued loans taken out after July 1. Interest rates will be fixed over the life of the loan, which King said will provide borrowers with certainty to plan for the future.
The bill also imposes a cap. Interest rates may never exceed 8.25 percent for undergraduate students, 9.5 percent for graduate students and 10.5 percent for PLUS borrowers.
The change will cut interest rates nearly in half for 9 million undergraduates who will be taking out a loan this summer from 6.8 percent to 3.86 percent, King said. The Congressional Budget Office determined that the legislation will save taxpayers $715 million over 10 years.
This savings is important for U.S. households and particularly for students who are concerned about the cost of getting a secondary education. Many graduates today are drowning in student loan debt, especially those who took out private bank loans or consolidated after graduating in the hopes of saving money.
Setting student loan rates low and setting a cap on those interest rates is sure to provide relief for borrowers as well as allow them to plan for the future, so they know what their payments will be in the long term.
We’re pleased Congress can come together on at least some issues in the name of relief for Americans. Hopefully, this kind of bipartisan work will lead to other resolutions of outstanding issues and compromise on a federal budget.
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Today’s editorial was written by City Editor Robyn Burnham on behalf of the Journal Tribune Editorial Board. Questions? Comments? Contact Managing Editor Kristen Schulze Muszynski by calling 282-1535, Ext. 322, or via email at kristenm@journaltribune.com.
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