Manchin Applauds Drop in Student Loan Rates for Next School Year Thanks to Bipartisan Student Loan Certainty Act
Washington, D.C. – U.S. Senator Joe Manchin (D-WV), who led the Bipartisan Student Loan Certainty Act of 2013, celebrated the news that federal undergraduate student loan rates are expected to drop from 4.29 percent to 3.76 percent for the upcoming school year, putting money back into the pockets of nearly 6.4 million undergraduate student borrowers. Senator Manchin joined Senators Lamar Alexander (R-TN), Angus King (I-ME) and Richard Burr (R-NC) to introduce and pass the 2013 legislation that tied student loan interest rates to market rates.
“Higher education is the key to opportunity and the best way to keep the United States competitive in the global marketplace, and to keep the best and brightest in West Virginia. 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 will lead to a tick downward in student loan interest rates this coming school 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.”
The Bipartisan Student Loan Certainty Act, that was signed into law in 2013, ties student loan interest rates 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 1st 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 is expected to be 3.76 percent, down from the current rate of 4.29 percent. The rate on graduate loans is expected to be 5.31 percent, down from 5.84 percent. And the interest rate for PLUS loans for graduate students and parents is expected to be 6.31 percent, down from 6.84 percent.
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