Monday, July 15, 2013

Senators Reach Loan Deal

Senators Reach Loan Deal - The compromise would be retroactive, so students taking out loans after July 1 would get the new interest rate. Based on Wednesday's Treasury yield, undergraduate loans issued today would have an interest rate of 4.5 percent; graduate loans, 6.5 percent; and PLUS loans, 7.2 percent. All are lower than the rates for those loans under current law.
 Final details on the interest rate are awaiting a score from the Congressional Budget Office, expected midday today. But late Wednesday night, the group agreed that all undergraduate loans would be set at the 10-year Treasury yield plus 1.8 percentage points. For graduate loans, the rate would be the 10-year yield plus 3.8 percent; for Parent PLUS loans, the 10-year yield plus 4.5 percent.
Setting a single rate for all undergraduate loans means that subsidized loans, which go to students determined to have financial need, would no longer have lower rates than unsubsidized loans, which are available to all undergraduates regardless of need. From 2007 until last week, subsidized loans had lower interest rates. The rate for unsubsidized loans has been 6.8 percent.
If the plan passes the Senate, the House of Representatives is likely to follow suit, said a senior Republican aide familiar with the negotiations. A vote on the measure has not yet been scheduled.


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