Smith Votes for Long-Term Fix for Student Loan Interest Rates
Today, Congressman Adrian Smith (R-NE) voted in favor or H.R. 1911, the Smarter Solutions for Students Act, which prevents interest rates from doubling on millions of student loans on July 1, 2013. The legislation would permanently move all federal student loans (except Perkins loans) to a market-based interest rate and get Congress out of the business of setting student loan interest rates. This commonsense proposal is similar to a plan put forth by President Obama’s 2014 budget request.
“Without action, millions of recent college graduates and other borrowers could see the interest rates on their student loans double,” said Smith. “The legislation passed by the House of Representatives today would prevent these rate hikes, give borrowers greater certainty, and restore responsibility for interest rates to the free market.”
Under the bill, student loan interest rates would reset once a year and move with the market. Both subsidized and unsubsidized Stafford loan interest rates would be calculated based on the 10-year Treasury note plus 2.5 percent. Parent and graduate PLUS loans would be calculated using the 10-year Treasury note plus 4.5 percent. The legislation would allow students to take advantage of lower interest rates when available, while also protecting students against higher interest rates by imposing a reasonable cap of 8.5 percent on Stafford loan interest rates and 10.5 percent on PLUS loan interest rates.