Skip Ribbon Commands
Skip to main content

 Email  Share  Print

Subsidized Student Loan Rates Double July 1

June 28, 2013

Capitol

Senate Fails to Strike Deal on Legislation Preventing Increase

Students applying for new federally subsidized student loans will see the interest rate double from 3.4 percent to 6.8 percent Monday, after Congress failed to pass legislation preventing the automatic hike.

The Senate spent the month of June floating a range of bills to address the problem. The most recent was introduced June 27 by Sens. Lamar Alexander (R-TN), Joe Manchin (D-WV), Richard Burr (R-NC), Angus King (I-Maine) and Tom Coburn (R-OK). Their legislation draws on concepts introduced by Republicans and the White House, including tying interest rates to the financial markets. It’s also similar to the measure (H.R. 1911) the House approved in May, which would base interest rates on the 10-year Treasury note and allow the rates to fluctuate. Unlike the House bill, the Senate measure would not cap rates—one of several differences between the two proposals.

The Senate bill also would differentiate between undergraduate and graduate Stafford loans for the first time in the history of the program, with graduate students paying a higher interest rate (approximately 5.21 percent for graduate students in the first year, compared to 3.66 percent for undergraduates).

Democratic leadership in the Senate continues to favor a short-term extension of the current rate, so this latest bill was not brought up for a vote this week. Two earlier bills (S. 1003 and S. 953) failed to clear the 60-vote hurdle required to cut off debate and move forward to a final vote.

Senate Majority Leader Harry Reid (D-NV) and Sen. Tom Harkin (D-IA) have raised the possibility of holding a vote after the July 4th recess to retroactively adjust the rates if a compromise can be reached. The soonest this could happen is the week of July 8.

Also see:

No Deal on Loans
Inside Higher Ed (June 28, 2013)

Higher Student-Loan Interest Rates Could Have Political Costs
The Chronicle of Higher Education (June 28, 2013)

Lawmakers Fail to Reach Student Loan Deal Before July 4 Break
Fox News (June 27, 2013)

Other ACE News

  • June 30, 2015

    Today's Headlines

    HEADLINES: Today's Top Higher Education News

    In this morning’s headlines, The Chronicle of Higher Education takes a closer look at what to expect when the Supreme Court rehears the race-conscious admissions case, Fisher v. University of Texas at Austin. The Wall Street Journal looks at the...

  • Institutional Capacity

    June 29, 2015

    Apply Now for ACE’s Institute for New Presidents

    New college and university leaders from all sectors of higher education can apply now for the 2015-16 ACE Institute for New Presidents, which is designed specifically for presidents in their first three years of service.

  • Supporting Student Veterans

    June 29, 2015

    Bob Woodruff Foundation Grant Extends Program to Train College Mental Health Counselors

    A grant from the Bob Woodruff Foundation will allow ACE to extend an initiative that trains college and university mental health counselors on how to better address issues such as post-traumatic stress and suicide prevention in their work treating...

  • June 26, 2015

    Education Department Scales Back Plan to Rate Colleges

    The Department of Education (ED) announced yesterday that it has scaled back the planned Postsecondary Institution Ratings System (PIRS) first announced by President Obama in August 2013.

  • Budget and Appropriations

    June 26, 2015

    Congress Moves Forward on Education Funding

    The House and Senate appropriations committees both passed their FY 2016 Labor, Health and Human Services, and Education bills this week, and the results were somewhat mixed for higher education.

 

 Related Content