Idaho Congressman Simpson today supported H.R. 1911, the Smarter Solutions for Students Act. The bill would prevent interest rates on new federally subsidized undergraduate Stafford Loans from increasing to 6.8% from their current rate of 3.4%. It permanently moves the rate to a market-based rate, tied to the 10-year Treasury Note. The bill passed 221 to 198.
"I have always said that every student who wants to attend a college or university should be able to, and money should not be an impediment to higher education," said Congressman Simpson. "It hurts our country if capable students don't seek higher education because they can't afford it."
The bill would effectively take Congress out of the business of setting student loan interest rates by providing a permanent fix and tying rates to the market rate. On July 1st rates go up to 6.8% as required by current law. If this bill becomes law it is estimated the rate will be 4.4%, and the rate would be reset once a year to keep to the 10-year Treasury Note. The bill is also estimated to save $3.7 billion over 10 years.
"The longer Congress fails to act and the closer we come to July 1st, the more concerned students and families become that their rate will double," added Simpson. "An increase of that size would be overwhelming for many students seeking a new federal loan in this economy."
The bill now moves to the U.S. Senate for consideration. Meanwhile, the so-called "loan cliff" is barely more than a month away.