Larsen Votes for Bipartisan Student Loan Fix

Jul 31, 2013 Issues: Education, Jobs Labor and the Economy

WASHINGTON—Rep. Rick Larsen, WA-02, today voted for a bipartisan compromise on student loan interest rates that will cut interest rates for students on federal loans in college and graduate school. Interest rates for undergraduate loans doubled on July 1.

“America needs to be telling its young people that we will invest in them,” Larsen said. “This bipartisan compromise stops the doubling of interest rates for students today and locks in those interest rates for the life of the loans. While students in future years will see higher rates, those rates will be capped. It’s not a perfect law, but compromises hardly ever are.

“Congress needs to stay focused on keeping college affordable. It’s the right thing to do for students, who need higher education to get the best jobs, and it’s the right thing for our economy, which depends on a well-trained workforce.

“We need to expand Pell and Perkins grants that help low- and middle-income students afford college and technical training. And we need to make sure that students are getting the skills they need in college to thrive after graduation.”

The bipartisan compromise, passed by the Senate last week, ties student loan interest rates to the rate of a 10-year Treasury note.

  • Loan rates for undergraduate students in the coming academic year will drop from the current law rate of 6.8 percent to 3.86 percent.
  • Rates for graduate students will drop from 6.8 percent to 5.4 percent.
  • Rates for PLUS loans, taken out by parents and graduate students, will fall from 7.9 percent to 6.4 percent.

Rates are locked in for the life of the loans, but the rates for new loans can vary over time. The legislation caps the rates at 8.25 percent, 9.5 percent and 10.5 percent respectively.