Democrats Introduce Legislation to Freeze Student Loan Interest Rates for Two Years
April 16, 2013
U.S. Senator Jack Reed (D-RI) and U.S. Representative Joe Courtney (D-CT) introduced legislation last week that would prevent the interest rate on subsidized Stafford student loans for undergraduate students from doubling July 1, from 3.4 to 6.8 percent.
The short-term fix would lock in the lower 3.4 percent rate for two years, giving lawmakers time to negotiate a permanent solution.
“It is in our national interest to try and keep student loan rates low and college more affordable,” said Reed. “While we work toward a viable long-term solution, it is vitally important Congress stops the interest rate hike on July 1.”
The legislation contrasts sharply with a measure offered by a trio of Senate Republicans. Sens. Lamar Alexander of Tennessee, Tom Coburn of Oklahoma and Richard M. Burr of North Carolina’s plan would peg the interest rate on newly-issued federal student loans to the U.S. Treasury 10-year borrowing rate plus 3 percentage points.
There is considerable agreement on both sides of the aisle that the current fixed rate should be replaced by a market-based variable rate, according to CQ, but Democrats have generally insisted on including a cap as a protection to borrowers to keep the rate from going too high.
Related Links:
Press Release from Senator Jack Reed’s Office
CQ
https://www.cq.com/doc/news-4254503
Michelle Cormier Mott
share