Several U.S. senators who sponsored the Bipartisan Student Loan Certainty Act of 2013 said on Wednesday that nearly 8 million undergraduate students borrowing money for college for the coming school year will enjoy the benefits of a lower interest rate.
Sens. Lamar Alexander (R-TN), Angus King (I-ME), Richard Burr (R-NC) and Joe Manchin (D-WV) sponsored the legislation two years ago that tied the interest for student loans to market interest rates. Under the terms of the law, the interest rate for student loans will drop from 4.66 percent to 4.29 percent effective July 1, 2015. The decrease will save students and their families millions of dollars in interest.
“Student borrowers are going to save millions next year because Congress voted to give students the benefit of a market-based solution,” Alexander said. “This bipartisan permanent plan made students’ loans cheaper, simpler and more certain, as students know their rates will last for the life of the loan.”
“At a time of skyrocketing student debt, it’s welcome news that our bipartisan solution is continuing to save borrowers billions of dollars in interest costs,” King said. “Those are real savings that put money back into the pockets of students who can then invest it in their future. Our long-term fix has provided students with certainty about their borrowing costs and has gotten Congress out of the business of setting arbitrary interest rates.”
“I’m thrilled that students across the country have seen the interest rates on their student loans drop for the next year, in addition to over $8 billion in savings from the past year,” Burr said. “When I introduced the Bipartisan Student Loan Certainty Act, I knew this law would benefit 100 percent of students in the U.S., and with today’s news, our students and parents continue to reap the benefits. The facts now show that more controversial legislation would not have served students’ best interests. My bill was the right solution at the right time.”
“Some bedrock values define America, and one of them is pretty fundamental — we believe in opportunity,” Manchin said. “By linking student loan interest rates to market rates, we have reduced the financial burden on students, allowing them to focus on working hard to succeed in our competitive world and to help lead America to a better future for generations to come.”
The federal government is expected to loan nearly $100 billion to students next year. The vast majority of those loans will go to undergraduate students. The interest rate on graduate loans will drop from 6.21 percent to 5.84 percent. The interest for PLUS loans, offered to graduate students and parents, will be 6.84 percent, down from 7.21 percent.