August 9th, 2013
On August 9, President Obama signed into law HR 1911, the Bipartisan Student Loan Certainty Act of 2013. HR 1911, as amended by the Senate, would move all student loan interest rates (except for Perkins loans) to a market-based rate tied to the yield on the 10-year Treasury bond. Under the bill, interest rates on subsidized and unsubsidized loans for undergraduate students would be set at the 10-year bond rate plus 2.05 percent, capped at 8.25 percent; for graduate students, the rate would be the 10-year bond rate plus 3.6 percent, capped at 9.5 percent; and for parent loans, the new rate would be the 10-year bond rate plus 4.6 percent, capped at 10.5 percent. Interest rates for new loans issued in any given year would change annually, but would remain fixed until the loan was repaid. While rates will fluctuate over time, in the short run, rates will be lower. For the coming year, interest rates for undergraduates will be 3.86 percent (down from the current rate of 6.8 percent), for graduate students the new rate will be 5.41 percent (down from 6.8 percent), and for parents the new rate will be 6.41 percent (down from 7.9 percent).