Courtney Statement on New 2016-2017 Federal Student Loan Interest Rates
WASHINGTON, D.C. —Today, Congressman Joe Courtney (CT-02) made the following statement after the spring auction of ten year treasury bonds, which is used to set the interest rates for federal Stafford student loans. As a result of the auction that occurred yesterday, the new interest rate for federal Stafford undergraduate student loans for the 2016-2017 school year is expected to be 3.76%, a decrease from the current rate of 4.29%.
Rep. Joe Courtney with President Obama in the Oval Office during the signing of the Bipartisan Student Loan Certainty Act of 2013 on August 9, 2013. Full resolution photo available upon request.
“The news that interest rates for federal student loans will drop is a direct benefit of the 2013 Bipartisan Student Loan Certainty Act,” Courtney said. “The new rate of 3.76% is not just a reduction from the current rate, but is also a full 3% savings from the rate hike we blocked in 2013. For the 15 million students who rely on Stafford, this will result in thousands of dollars in savings over the life of the loan. We must continue to do more, however, to address the growing education debt crisis in this country – and this news should not be an excuse for Congress not to take the action we know is needed to address this challenge.”
The Bipartisan Student Loan Certainty Act, which Courtney helped pass and President Obama signed in August 2013, blocked a statutory rate increase that would have set rates at 6.8% for undergraduate students. The new law substituted that mandatory rate with a formula based on 10-year treasury rates, plus 2% to cover the cost of default and administrative costs. The annual Stafford student loan interest rates are set on July 1, but are determined by the spring auction of treasury bonds conducted by the U.S. Department of the Treasury.
Courtney was the leader of the House Democratic Caucus effort to prevent the Stafford student loan rate hike increase in 2013, and was in the Oval office when President Obama signed the Student Loan Certainty Act of 2013 into law.
Yesterday’s development highlights that Congress still needs to extend lower interest rates for older, high-rate loans that millions are still paying – sometimes with rates as high as 10-11%.
The Bank on Student Emergency Loan Refinancing Act which Courtney and Sen. Elizabeth Warren (D-MA) have introduced would allow ‘legacy loans’ – both public and private – to be refinanced at a similar low rate as new Stafford student loans. The Congressional Budget Office (CBO) has estimated that this measure would provide $50 billion in debt relief for student borrowers, putting money back in the pockets of millions of Americans.
“The good news of lower rates for new Stafford loans should re-double our efforts to lower the rates of older debt – let’s pass the Bank on Student Emergency Loan Refinancing Act,” said Courtney.