Student Loan Rates to be Reduced

WASHINGTON — A bipartisan bill that would lower the cost of borrowing student loans and reverse a recent loan rate hike has gone to President Barack Obama for approval.

After the House overwhelming approved the bill in a 392-31 vote, students in the United States may soon receive lower interest rates for federal student loans.

"My colleagues and I have been fighting for months for a long-term market based solution that will serve students and taxpayers and the legislation before us today will do just that," said Representative John Kline, R-Minn., chairman of the House Committee on Education and the Workforce.

Undergraduate students would take out loans at an interest rate of 3.9 percent for subsidized and unsubsidized loans. Graduate students will borrow at 5.4 percent and parents at 6.4 percent. New rates will be applied to loans granted after July 1.

According to the House Committee on Education and the Workforce, the bill would provide students $25 billion in debt relief over the next five years and caps interest rates at 8.25 percent to protect students from rising interest rates.

Democrats and Republicans underwent a bitter debate concerning the bill, with Democrats vocal that the issue of student debt is still not resolved.

“While this compromise is not perfect, the need for action to reduce student loan rates is urgent,” said Representative Elizabeth Esty, D-Conn. “Students and parents across the district are telling me they’re worried that with crushing college debt they won’t be able to pursue their chosen career, buy a home, or start a family of their own.”

Though lower rates would apply now, as the economy progresses student loan rates will rise. New loan rates would only apply to new loans and the initial interest rate will remain the same for the life of the loan.

"Enactment of the Senate bill in no way means our work is done,” said Representative George Miller, D-Calif., of the House Education and the Workforce Committee. “This bill helps reduce costs to students and families, but it does not solve the long-term student loan debt crisis. It does not eliminate the significant profits currently collected by the federal government from student loans. Accordingly, I remain committed to keeping interest rates down and to addressing college cost as a whole.”

Obama is expected to sign the bill into law before the end of the month.