The U.S. House of Representatives passed a bill to lower Federal student loan interest rates to 3.9% from 6.8% for the upcoming 2013-14 school year–following the U.S. Senate’s passage of the same bill last week. The rate reduction would mean a savings of $944.44 in interest over the life of the loan, for first year college students who borrow the maximum amount or $5500. If President Obama signs the bill into law, interest rates for Federal student loans and Federal PLUS Loans (i.e. loans in parents’ names for college expenses) would be tied to U.S. Treasuries and fluctuate with the market, resetting each year. The proposed legislation still fixes the interest rate at the amount when the loan is borrowed over the life of the loan. Also, interest rates would be capped at 8.25% for undergraduate student loans, and 10.5% for Parent PLUS loans.
For more information see Reuters
Photo Credit: Los Angeles Sheriffs Department
