<p>So my parents have been waiting to see what would happen with this Bill before having me take out loans through private lenders...</p>
<p>But, my question is, would it affect the interest rate of other lenders (ie. Wells Fargo, Sallie Mae, etc.) or is this only going to aid people who received federal unsubsidized or subsidized loans? Thanks!</p>
<p>I could be mistaken, but I think this is only for the federally funded Direct loans…and maybe Perkins loans.</p>
<p>And are those loans that you are awarded through your financial aid package or are they ones that you take out?</p>
<p>just federal loans.</p>
<p>It just affects federal loans. The current proposal - and it is still just a proposal - would affect undergraduate sub, undergraduate and graduate unsub, Grad PLUS, and Parent PLUS interest rates. While all would be reduced in the short term, each year would have a new fixed rate that will be tied to 10 year T-bill rates + 2.05%. While this sounds good today, the cap is quite high … 8.25% sub/unsub, 9.5% Grad PLUS, and 10.5% Parent PLUS. That is really high!!</p>
<p>Thank you all so much!</p>
<p>
Looks like it’s a done deal. See <a href=“Senate Approves College Student Loan Plan Tying Rates to Markets - The New York Times”>Senate Approves College Student Loan Plan Tying Rates to Markets - The New York Times
Like kelmon says, “the cap is quite high.” However, we may be hitting the cap in 5 years? 10 years? 15 years? Nobody knows.</p>
<p>Congress intentionally tries to confuse voters on issues like this. There are multiple quotes about how much debt students graduate with, but they fail to point out that much of this debt, and virtually all of the overburdened students, comes from private lenders not covered by the pending bill.</p>
<p>It would be far better to work to educate students in high school about debt than a “feel good” bill limiting interest. Even better, force colleges to limit tuition increases and reduce administration expenses.</p>
<p>Here is the latest info on the Senate bill that passed yesterday. It is expected to pass in the House and thus become law; it will be retroactive to July 1, 2013:</p>
<p>The deal reached in the Senate marks a long-awaited compromise by Senate Republicans, Democrats, and the Obama Administration. Under the act interest rates would be based on the 10-year Treasury bill plus the following percentage add-ons:</p>
<p> 2.05 percent for undergraduate Stafford (subsidized and unsubsidized)</p>
<p> 3.6 percent for graduate Stafford</p>
<p> 4.6 percent for PLUS (parents and graduate students)</p>
<p>In addition, the deal includes caps: 8.25 percent for undergraduate Stafford; 9.5 percent for graduate Stafford; and 10.5 percent for PLUS. Loans would be variable-fixed, meaning students would receive a new rate with each new loan, but then that rate would be fixed for the life of the loan.</p>
<p>My feeling is that there will be backlash on the rates once interest rates begin to rise again (which they most certainly will do). IMO, this will last only as long as low interest rates last. Then we’ll be revisiting the topic once again.</p>