U.S. Senator Pat Roberts today voted to set permanently interest rates for all new Stafford student loans over the life of the loans ensuring certainty for students and parents struggling to finance higher education. Senator Roberts voted in favor of S. 1003, the Comprehensive Student Loan Protection Act.
"Students and parents have faced too much uncertainty and confusion regarding student loan rates because Congress constantly changes the rules of the game," Roberts said. "All a parent and a student really want to know is "how much will it cost to graduate?' By tying all student loans to a fixed market rate, families know what to expect and can plan their budgets accordingly so that kids can focus on what's important -- completing their studies and launching a career."
Set by Congress, the student loan interest rate for Stafford Subsidized Student Loans is scheduled to revert back to 6.8% from 3.4% on July 1, 2013. With the current Treasury note at 1.75 percent, a student who takes out a covered student loan for next year would pay 4.75 percent for the life of that loan under the Roberts-backed bill. That's because The Comprehensive Student Loan Protection Act sets interest rates for all new Stafford loans (subsidized and unsubsidized) and PLUS loans to be based on the 10-year Treasury rate plus 3.0 percent. This will apply to all new loans issued after July 1, 2013. Rates are fixed for the life of the loan.
The Congressional Budget Office (CBO) reports a savings of $15.6 billion over 10 years. Unlike the alternative proposal that only addresses about 40 percent of student loan volume, S. 1003 addresses all federal student loans (subsidized and unsubsidized Stafford loans and PLUS loans for parents of students and graduate students).
S. 1003 represents the consensus position shared by House and Senate Republicans and the Obama Administration to tie student loan interest rate to market rates.
The bill failed on a party line vote of 40-57.
Senator Roberts is a key member of the Senate Committee on Health, Education, Labor and Pensions.