Senators are ready to offer students a better deal on their college loans, but future classes could expect higher interest rates.
Tentative deal to restore low rates
A bipartisan group of Senators has drafted a tentative agreement to restore lower interest rates for student borrowers.
Under the agreement, all undergraduates this fall would borrow around 3.85% interest rates.
Graduate students would have apply for loans at 5.4% and parents would allow to borrow at 6.4%.
Those rates would increase as the economy strengthens and it becomes more costly for the government to borrow money.
Republican and Democrats, who insisted on anonymity because they’re not authorized to discuss the ongoing negotiations, described the agreement.
Deal to reduce deficit
The deal would provide students lower interest rates up through the 2015 academic year but then rates were expected to increase above where they were when students left campus this spring.
Legislators from both parties called the rate hike senseless, but differed on how to restore the lower rates.
The House has already passed student loan law that also links interest rates to the 10-year Treasury note.
The tentative agreement is expected to decrease the deficit by $715 million over the next decade.