WASHINGTON, D.C. — College students could be getting a break when it comes to student loan interest rates, at least for a little while.
The U.S. Senate has passed legislation this week that will make it less expensive for college students to borrow money to pay for classes, housing and books.
“Everything that we can do to give a student a break, the lowest interest in going towards their education attainment should be done,” said U.S. Senator Joe Manchin
The bill that passed 81-18 on Wednesday would link interest rates on federal student loans to the financial markets.
Immediately, students will pay less since interest rates jumped to 6.8 percent on July 1. This bill will cut that amount in half, taking it down to 3.86 percent.
“We have a bill that is, basically, market driven for the next ten years, it will go off the T bills, so whatever the Treasury bill is for the next ten years, there’s different categories,” said Manchin.
The Congressional Budget Office estimated the bill will save students $715 million over ten years.
U.S. Senator Jay Rockefeller, though, had some reservations.
“This compromise bill averts an immediate crisis by lowering interest rates for students over the next few years. We want to encourage our students to get higher degrees and follow their dreams, not weigh them down in debt they’ll never be able to pay off,” he said in a statement.
“But I’m still very concerned about the higher costs students could see in the long run because of this bill. This compromise is an important first step, and I’m committed to continuing to protect our students and graduates from astronomical loan rates.”
Critics of the legislation said tying interest rates to the markets could mean much higher amounts when the economy improves. There is a cap, though, on how high those rates can go.
The measure is similar to one that has already come out of the U.S. House of Representatives.