Sens. Joe Manchin (D-WV) and Angus King (I-ME) seem intent on increasing the burden for students taking out federal loans. They helped
filibuster the majority's effort to keep interest rates low on Wednesday, and are continuing to insist on their Republican-sponsored bill in
negotiations with leadership. Now they have
apparently prevailed with a tentative deal.
Under this agreement, rates for all federal loans for undergraduate students would be tied to the variable rates of the 10-year Treasury bond, plus 1.8 percentage points, according to the aides. Loans for graduate students would be the Treasury rate plus 3.4 percentage points, and loans taken out by parents through a federal PLUS program would be the Treasury rate plus 4.5 percent.
That means for the coming school year, undergraduates taking out new federal loans would see interest rates of about 3.6 percent, while rates for graduate students would be about 5.2 percent and PLUS loans would be 6.31 percent. That’s a decrease for everyone. Right now, rates are 6.8 percent for undergraduates and graduate students, and 7.9 percent for PLUS loans.
The problem is that this proposal could put loan rates much higher. They've set caps much too high at 8.25 percent for undergraduates and 9.25 percent for all other loans. Ultimatley, after this year, it could be worse than doing nothing and leaving rates at 6.8 percent. It's certainly not an improvement on the
majority's solution of extending rates at 3.4 percent for another year.
Do you live in Maine or West Virginia? Take action now by emailing Sens. King or Manchin.