WASHINGTON — The U.S. House approved a bill to set interest rates on student loans to a market-based rate, sending it to President Obama for his signature.
The Senate passed the bill last week as a way to alleviate the 6.8 percent interest rate on federally subsidized student loans. The bill would set the interest rate to the 10-year Treasury note price, plus a few percentage points depending on the type of loan. Undergraduate students will borrow at just under 3.9 percent this year under the new law.
The compromise is similar to market-based plans pitched by both President Obama and House Republicans, led by Rep. John Kline. The House passed its version of the bill in May, but senators were unable to come to a compromise on the matter until last week. As such, the interest rate on undergraduate subsidized Stafford loans doubled on July 1; this bill retroactively lowers that rate.
The bill passed with broad bipartisan support, 392-31. In a statement, Kline called it “a win for students and taxpayers.”
Even so, student groups have been uneasy about the compromise, worrying that student loan interest rates will rise as Treasury note prices increase. Some lawmakers have said they’ll look to fix the system, or otherwise help students manage the cost of higher education, before that happens a few years from now.
Obama supports the bill and is expected to sign it into law.
Devin Henry can be reached at dhenry@minnpost.com.
