Hoeven Cosponsors Bipartisan Student Loan Certainty Act
WASHINGTON – Senator John Hoeven today announced that he will cosponsor the Bipartisan Student Loan Certainty Act, which will reduce loan rates for both subsidized and unsubsidized Stafford loans, as well as for Stafford graduate and PLUS loans. The measure is revenue neutral, meaning any revenues generated by the loans are used only to administer the program, not to support other programs.
In addition to Hoeven, prime sponsors of the bill include Senators Joe Manchin (D- W.Va.), Lamar Alexander (R-Tenn.), Kelly Ayotte (R-N.H.), Richard Burr (R-N.C.), Tom Carper (D-Del.), Tom Coburn (R-Okla.), Johnny Isakson (R-Ga.), and Angus King (I-Maine).
The Student Loan Certainty Act would tie all federal student loan rates to the 10-year U.S. Treasury note rate to reflect current market and employment conditions. Specifically, the bill would take the rate for 10-year Treasury notes, which this year would be 1.8 percent, and add 1.85 percent for new subsidized and unsubsidized Stafford loans; 3.4 percent for graduate Stafford loans; and 4.4 percent for PLUS loans. Rates would be locked in for the life of the loan.
If passed, subsidized and unsubsidized Stafford rates would be 3.66 percent, only slightly higher than the former 3.4 percent rate and substantially lower than the current 6.8 percent rate. Graduate rates would be 5.21 percent for students and 6.2 percent for parents of students, less than the current rate of 7.9 percent for both. The consolidated loan rate would remain at 8.25 percent. Also, student borrowers would have another safety-net measure because the loan repayment would also be effectively capped at the Income-Based Repayment level, which limits student loan payments to 15 percent of income, and forgives any remaining balance after 25 years.
“Higher education has long-been the gateway to the American Dream, and for that reason, we want to make sure that paying for college is affordable and fair,” Hoeven said. “Our bill provides a permanent solution to make sure that low- and middle-income students have access to a quality education at affordable rates, and includes appropriate safety nets to make sure they can meet their obligations and get a good start in their career.”
As part of the Affordable Care Act passed in 2010, Congress barred private banks from offering student loans. Two years ago, Congress passed a temporary reduction in rates from 6.8 percent to 3.4 percent, and extended the reduction again last year. The bipartisan group of senators believe students need a permanent fix to give them the certainty they need to plan their college careers.
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