Interest rates for nearly 6.4 million undergraduate borrowers will fall from 4.29 to 3.76, putting money back in students’ pockets
WASHINGTON, May 11 – The bipartisan group of U.S. senators who sponsored the Bipartisan Student Loan Certainty Act of 2013 today celebrated the news that student loan rates will drop from 4.29 percent to 3.76 percent, putting money back into the pockets of nearly 6.4 million undergraduate student borrowers.
Senators Lamar Alexander (R-Tenn.), Angus King (I-Maine), Richard Burr (R-N.C.), and Joe Manchin (D-W.V.) sponsored the 2013 legislation that tied student loan interest rates to market rates.
Senator Alexander said: “Nearly 6.4 million student borrowers and their families are going to have more money in their pockets thanks to our bipartisan bill that established a market-based solution for determining interest rates. Students’ loans are cheaper, simpler and more certain, now that rates aren’t subject to the whims of Congress.”
Senator King said: “Once again, student borrowers across the country are set to save billions of dollars in interest payments. That’s real money that can stay in their pockets and be put toward something more important – their futures. It’s encouraging not only to see our legislation continue to pay off for students and families, but also to know that when we put politics aside and work together to find common ground, we can enact real and meaningful change for people. The Bipartisan Student Loan Certainty Act has done that, and I’m pleased that it’s made student loans cheaper and simpler for America’s students.”
Senator Burr said: “This is great news for students in North Carolina and across the country. North Carolina students and families alone are set to save over a billion dollars. This additional reduction in student loan rates is proof that the Bipartisan Student Loan Certainty Act is working. I fought hard for this legislation because it was the right choice for America’s student borrowers. Today’s announcement that student loan interest rates are dropping from 4.29 percent to 3.76 percent is a clear sign that the Bipartisan Student Loan Certainty Act is serving the best interest of students.”
Senator Manchin said: “Higher education is the key to opportunity and the best way to keep the United States competitive in the global marketplace, but burdening our students with trillions in student loan debt only hinders our progress as a nation,” Senator Manchin said. “In 2013 we took steps to ease that burden through bipartisan legislation that links student loan interest rates to market rates, which has led to a tick downward in student loan interest rates this year. This is great news but more needs to be done to ensure our students have access to opportunity without a burden that is too heavy that it weighs down our country’s growth.”
Under the Bipartisan Student Loan Certainty Act signed into law in 2013, student loan interest rates are tied to the government’s 10-year borrowing cost – specifically the yield on the last auction of the U.S. Treasury 10-year Note held before June of each year. The rates for undergraduate loans are the 10-year Note plus 2.05 percentage points—an addition to cover costs of defaults, collections, deferments, forgiveness, and delinquency. The legislation capped undergraduate rates at 8.25 percent, so students will never have to pay more than 8.25 percent interest on their loans.
For loans issued on or after July 1 for academic year 2016-17 , the interest rate on undergraduate loans will be 3.76 percent, down from the current rate of 4.29 percent. The rate on graduate loans will be 5.31 percent, down from 5.84 percent. And the interest rate for PLUS loans for graduate students and parents will be 6.31 percent, down from 6.84 percent.
Margaret Atkinson (Alexander): 202-224-0387