This bill ties student loan interest rates to the 10-Year Treasury rate, plus a fixed percentage, with caps in place for undergrad, grad, and parents loans between 8.25-10.5%. If the President signs this bill in to law, current borrowers will see a record low interest rate, near, but still above the old 3.4% undergrad rate they lost earlier this summer. However, it is projected that this low rate won’t be around for long and many graduates will not only face climbing tuition prices, but climbing interest rates.
The Student Loan Certainty Act will ultimately raise interest rates. The caps would be 8.25-10.5%, within the range of my private student loans! This is a band-aid fix and will end up hurting a lot of people in the long run!
The Higher Education Act is due for reauthorization in the FY2014. Let’s hope our “pass it now, fix it later” congress can actually readdress this issue and the many other problems we see in higher education today!