POTUS Signs the Bipartisan Student Loan Certainty Act Into Law
Today, S. 1334, the Bipartisan Student Loan Certainty Act, a bill introduced by U.S. Senators Richard Burr (R-NC), Joe Manchin (D-WV), Angus King (I-ME), Tom Coburn (R-OK), Tom Carper (D-DE), Tom Harkin (D-IA), Lamar Alexander (R-TN), and Dick Durbin (D-IL), was signed into law. This bill would lower interest rates for 100% of borrowers who have taken out, or will take out, a new federal student loan after July 1, 2013.
"I am pleased to see this important legislation signed into law. 100% of students and borrowers are winning today," Senator Burr said. "This bill ensures that student loan interest rates never become unaffordable for students, especially the poorest, who are seeking to improve their lives through higher education."
The Bipartisan Student Loan Certainty Act requires that, for each academic year, all newly-issued student loans be set to the U.S. Treasury 10-year borrowing rate (specifically, the yield on the 10-year note as determined by the last auction held before June of each year-not the changing daily rate) plus add-ons to offset costs associated with defaults, collections, deferments, forgiveness, and delinquency. The resulting interest rates for loans taken out this year, after July 1, 2013, would be 3.86% for subsidized and unsubsidized loans for undergraduate students, 5.41% on unsubsidized loans for graduate students, and 6.41% on PLUS loans for parents and graduate students. These rates would apply retroactively to newly issued loans taken out after July 1, 2013. The interest rate would be fixed over the life of the loan to provide borrowers with certainty to plan for the future. Additionally, this bill protects against the threat of unforeseen circumstances by imposing a cap to ensure interest rates never exceed 8.25% for undergraduate students, 9.5% for graduate students, 10.5% for PLUS borrowers. The Congressional Budget Office has determined this legislation would save taxpayers $715 million over ten years.
To learn more about the bill, click here.
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