Today, July 31, the U.S. House of Representatives considered and passed H.R. 1911, the Bipartisan Student Loan Certainty Act of 2013, by a voice vote. H.R. 1911 would reset interest rates on certain federal student loans, calibrate the interest rates to the 10-year Treasury note, and cap the interest rates at specified levels.
The new rates, upon enactment into law, will be:
- undergraduate loans—2.05% + 10-year Treasury note with the total interest rate capped at 8.25% (currently 6.8%),
- graduate and professional loans—3.6% + 10-year Treasury note with the total interest rate capped at 9.5% (currently at 6.8%),
- PLUS loans (parental loans)—4.6% + 10-year Treasury note with the total interest rate capped at 10.5% (currently at 7.9%).
Interest rates on certain undergraduate loans had been lowered to 3.4% by a law that expired on July 1, 2013. Undergraduate loans dispersed after July 1 would have had an interest rate of 6.8%. However, H.R. 1911 would reset interest rates on all federal student loans, except for Perkins loans, including subsidized and unsubsidized undergraduate, graduate, and PLUS loans (parental loans).
While H.R. 1911 would initially reduce all interest rates for these federal student loans, it would do so for only this academic year. Economic projections suggest rising interest rates and a higher 10-year Treasury note; therefore, interest rates could rise next academic year (2014–2015) and eventually could be higher than current rates.
It is expected that President Obama will sign the bill into law quickly to avoid having students borrow at the higher 6.8% rate for the upcoming 2013–2014 school year.
For more details, please contact Neil Snyder, ASHA's director of federal advocacy, at 800-498-2071, ext. 5614, or [email protected].