Senate negotiators have reached a deal on a new interest rate structure for federal student loans in time to avoid significant rate hikes before the next academic year, the Washington Post reports.
“For the coming school year, undergraduates would see rates of 3.86 percent. That’s lower than the current fixed rate of 6.8 percent … Graduate students would pay about 5.41 percent for the coming year… Loans taken out by parents for their dependent children would have an interest rate around 6.41 percent … Right now, graduate students have interest rates of 6.8 and 7.9 percent, while parents pay 7.9 percent.”
Inside Higher Ed explains the mechanics of the deal: “Undergraduate loans — those that are federally subsidized as well as those that are not — would be set at the Treasury rate plus 2.05 percentage points, while loans for graduate students would be set at 3.6 points above the Treasury rate, and loans for parents at 4.6 percentage points over the T-bill rate. The maximum rate would be capped at 8.25 percent for undergraduate loans, 9.25 percent for graduate student loans, and 10.25 percent for parent loans.”