U. S. Congress passes bipartisan bill regarding student loan interest rates
Story Date: Mon, 12 Aug 2013 08:21:00 EDT
The U. S. Congress has passed a bipartisan bill regarding student loan interest rates: H.R. 1911, the Smarter Solutions for Students Act(also known as the Bipartisan Student Loan Certainty Act, as amended by the Senate). The bill has passed both Senate and House and is on the way to President Obama for signature.
There will be changes for the 2013-2014 student loans first disbursed on or after July 1, 2013, as Congress made the bill retroactive to that specific point in time.
The new rate will be based on the 10-year U. S. Treasury bill plus the following percentages:
- 2.05 percent for undergraduate Stafford (subsidized and unsubsidized)
- 3.6 percent for graduate Stafford (only eligible for unsubsidized)
- 4.6 percent for PLUS (parents and graduate students)
What does that mean for this year?
The Stafford rate for graduate students will be approximately 5.41 percent for loans first disbursed July 1, 2013 or later. The rate for this year’s loan will remain fixed at that rate until you either pay off the loan or consolidate it with other federal loans. Prior graduate level Stafford loans are still 6.8 percent.
The Graduate PLUS rate will be approximately 6.41 percent for loans first disbursed on or after July 1, 2013. Again, the rate will remain fixed until you either pay off the loan or consolidate it with other federal loans. Prior Grad PLUS loans are still 7.9 percent.
If you have already received loan disbursements on or after July 1, you will receive a new disclosure notice from the U. S. Department of Education federal loan servicer of your loan, detailing changes. Loans being processed and disbursed over the next few weeks will generate disclosure notices from the servicer to borrowers detailing the new rates. Loans disbursed prior to July 1, 2013 for the 2013-2014 year remain at the old rates and fees. The legislation did not address origination fees for 2013-2014, which remain at 1.051% for Stafford and 4.204% for Grad PLUS and will be withheld from each disbursement.
Each year the U. S. Department of Education will reassess the rates based on the 10-year Treasury bill plus those factors above. Rates could increase or decrease depending on market influences to the Treasury bill.
The cap for interest rate adjustments on loans in future years:
- 9.5 percent for graduate Stafford and
- 10.5 for Grad PLUS loans
Once a rate is set for that year, any new loans first disbursed during that year will carry that new rate for the duration of that loan. Changes in rates from year to year will not impact interest rates on loans from prior years.
The bill is currently with President Obama for his signature. You can track the bill’s progress at: http://www.govtrack.us/congress/bills/113/hr1911.