WASHINGTON: Borrowing for tuition, housing and books would be less expensive for college students and their parents this fall but the costs could soon start climbing under a bill the Senate passed overwhelmingly Wednesday.
The bipartisan proposal would link interest rates on federal student loans to the financial markets, providing lower interest rates right away but higher ones later if the economy improves as expected. The measure was similar to one that already had passed the Republican-led House and leaders from both chambers said they predicted the differences to be resolved before students start signing loan documents for the fall term.
“This compromise is a major victory for our nation’s students,” President Barack Obama said in a statement.
Undergraduates this fall would borrow at a 3.9 percent interest rate. Graduate students would have access to loans at 5.4 percent, and parents would borrow at 6.4 percent. The rates would be locked in for that year’s loan, but each year’s loan could be more expensive than the last. Rates would rise as the economy picks up and it becomes more expensive for the government to borrow money.
Liberal members of the Democratic caucus were vocal in their opposition over the potentially shifting rates included in the Senate measure, which passed with support from both parties, 81-18. The bill passed with support from 45 Republicans (including Sen. Rob Portman of Ohio), 35 Democrats and Sen. Angus King, the independent from Maine who helped negotiate the deal.
Sen. Mike Lee, R-Utah, joined 16 Democrats (including Sen. Sherrod Brown of Ohio) and Sen. Bernie Sanders, the Vermont independent who caucuses with Democrats, to oppose the legislation.
Sen. Claire McCaskill, D-Mo., did not cast a vote.
“This permanent, market-based plan makes students’ loans cheaper, simpler and more certain,” said Sen. Lamar Alexander, the top Republican on the Senate education panel. “It ends the annual game of Congress playing politics with student loan interest rates at the expense of students planning their futures.”