(Senator Debbie Stabenow press release, July 27, 2013)
Legislation to tie student loan rates to market rates passed the Senate today by a vote of 81-18. Students have paid an interest rate of 3.4% since 2011, but those rates expired as of July 1 and rates automatically doubled to 6.8%. The proposal passed by the Senate today could lead to rates jumping up to 7.25% or higher over the next few years.
Senator Debbie Stabenow voted against the legislation.
Earlier this month, Senator Stabenow sponsored legislation to retroactively freeze the student loan rate at 3.4% from July 1 of this year through June 30 of 2014, to give Congress an additional year to work on a comprehensive solution to the problem of growing student loan debt. Her proposal won a majority vote 51-49, but was blocked by a Republican filibuster.
“I’ve taken a close look at this proposal and the bottom line is by the time a freshman entering school this fall becomes a senior, her rates could nearly double,” Stabenow said. “I could not vote to put students in this position. I will continue to fight for a comprehensive solution to the problem of growing student loan debt and will continue to do all I can to make college education more affordable.”
The proposal the Senate passed today would peg the student loan interest rate to the 10-year Treasury bill so that it would fluctuate with the cost of Treasury notes. That would cause 2013 rates to jump to 3.9% this year, higher than last year’s 3.4%. Rates are then projected to steadily increase each year, with rates hitting 7.25% by 2018.
In Michigan, nearly 300,000 students will be hit with higher loan costs than they paid last year. The average student debt for Michigan students is approximately $26,000.
To read previous stories about the progression of the student loan legislation, see