CSU Office of Federal Relations

Low Student Loan Interest Rate Extended

July 10th, 2012

On July 6, President Obama signed HR 4348, which included provisions to maintain the interest rate on federally subsidized student loans at 3.4% for one more year. That rate had been scheduled to revert to 6.8% on July 1. After months of partisan wrangling over how to pay for the lower rate’s one-year $6 billion price tag, legislators settled on a mix of education and non-education related sources. The education portion comes from limiting new borrower eligibility for subsidized loans to 150% of program length. For example, a student enrolled in an eight semester program can receive subsidized loans for up to twelve semesters. The Department of Education will issue regulations on how this limit applies to part-time students and to students enrolled in post-baccalaureate teacher credential programs, such as those offered by CSU institutions. While the temporary lower rate will benefit some students, the CSU, like many in education circles, was dismayed that the relief came in part from cuts to other educational funding, part of a recent trend that has hurt both student borrowers and those who receive need-based aid like Pell Grants.

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Last Updated: May 08, 2015