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July 25, 2013

Senate OKs Student Loan Bill That Would Hike Rates After 2015 
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The Senate has approved a bipartisan measure to lower student loan rates
for now only to hike them in just a few years. The interest rate for
Stafford loans climbed to 6.8 percent earlier this month after Congress
failed to reach a deal to avoid the hike. Under the new Senate measure,
students will pay a lower rate through 2015, but then see those rates
jump as they become attached to financial markets. The bill passed by a
margin of 81 to 18. Democratic Sen. Elizabeth Warren was among those to
vote in opposition.

Sen. Elizabeth Warren: "My colleagues who support this proposal say it
will lower interest rates on loans for this year and that's all that
matters. That's the same thing credit card company said when they sold
zero interest credit cards and it's the same thing subprime mortgage
lenders said when they sold teaser rate mortgages. In all of these
cases, the bill comes due. Nobody disputes the fact that within just a
few years, according to our best estimate, all students will end up
paying far higher interest rates on their loans than they do right now."

Earlier this year, Sen. Warren proposed a measure that would have
lowered student loan interest rates to 0.75 percent — the same rate
given to big banks on government loans.

 

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