CHN: Student Loan Rates Prevented from Doubling; New Loan Changes Take Effect
On Friday June 29 the Senate cleared a bipartisan agreement that prevented student loan rates from doubling on July 1 and reauthorized highway, public transit and surface transportation programs for two years. Senators voted 74-19 to clear the measure for the President’s signature just minutes after the House approved the report for the legislation (H.R. 4348) with a 373-52 vote. In both chambers, the only “nay” votes were cast by Republican members.
Student loan interest rates would have doubled from 3.4 to 6.8% on July 1 had this $5.9 billion one-year extension of the current rate not been enacted. The increased student loan rate would not have affected existing loans, only new ones. While averting this increase certainly helps some students, some advocates have pointed out that Congress has already inflicted cuts in Pell grants for low-income students last year which remain in place (see this article in the May 14 edition of the Human Needs Report for more information). Despite loan interest rates staying the same, other loan changes taking effect on July 1 will still affect students attempting to pay for college. Students borrowing for graduate degrees will become responsible for paying the interest on their federal loans before they have graduated or immediately after they graduate. For undergraduate loans, the federal government will no longer cover interest payments during the six months after a student’s graduation.