H.R. 1911, the “Smarter Solutions for Students Act”, allows the interest rates on student loans to go up to 8.5% for undergraduate students and 10.5% for graduate students.
On July 1, 2013 the interest rate for federally subsidized Stafford student loans – which are loans for undergraduate students- are set to double from 3.4% to 6.8%. In 2008, Congress lowered the rates for four years and then extended the lower rates for one more year. July 1 is when the clock runs out on the lower rates.
Section 2: Adds a new section to the Higher Education Act of 1965.
- New Stafford student loans issued after July 1, 2013 will have an interest rate equal to the high-yield Treasury notes plus 2.5%; the rates will be capped at 8.5%.
- New PLUS loans – issued mainly to graduate and professional students – will have an interest rate equal to the high-yield Treasury notes plus 4.5%; the rates will be capped at 10.5%.
The bill passed the House of Representatives on May 23, 2013. President Obama has promised a veto.