Courtney Statement on Student Loan Agreement
WASHINGTON—Today, Representative Joe Courtney (CT-2) released the following statement on the bipartisan Senate agreement on student loan interest rates:
"After months of protracted and difficult negotiations, I am encouraged to see that President Obama and Senate leadership have arrived at a compromise to reduce student loan interest rates immediately and in the near term. This agreement is a significant improvement over the Republican bill passed by the House on May 23rd of this year, which would have subjected borrowers to unpredictable variable rates and cost Connecticut students and their families more.
"Unlike that bill, the compromise reached this week incorporates critical protections for borrowers, including some that are similar to the protections I proposed in the Student Loan Relief Act of 2013. First, unlike the floating variable rate proposed in the House bill, the compromise stipulates that interest rates be fixed—from the day the loan is taken out until it is fully repaid—which will protect students and their families from fluctuations in the market and save money in repayment over the long term. Second, the compromise includes caps on future student loan interest rates, to ensure that rates remain manageable even as market-based interest rates rise.
"Right now, millions of middle class families with college-bound students are making important decisions about how to finance their education, and it is critical that Congress work quickly to resolve the interest rate stalemate. This agreement represents an important step towards protecting middle class families in the near term, but it is also not our last chance to make college more affordable in the long term. Much work remains to be done, from reining in growth of tuition costs, to improving refinancing options for student borrowers, to improving transparency so prospective students can accurately compare college costs. As the Higher Education Act comes up for reauthorization next year, I welcome the opportunity to tackle these challenges, and will work to keep the dream of a college education within reach for Connecticut students."
If Congress does not act, rates for subsidized and unsubsidized Stafford loans for this academic year will be fixed at 6.8 percent. Under the bipartisan Senate proposal, interest rates for loans taken out this year would drop to 3.86 percent for subsidized and unsubsidized Stafford loans for undergraduate students, 5.41 percent for unsubsidized loans to graduate students, and 6.41 percent on PLUS loans for parents and graduate students. These rates would apply retroactively to newly issued loans taken out after July 1, 2013. The interest rate would be fixed over the life of the loan to allow students and their families the certainty to plan for the future.