Sen. Mike Johanns sees promise in the proposal to keep college student loan rates from doubling.
“It looks to me like it’s something I can support,” Johanns tells Nebraska reporters in a conference call.
The interest rate on subsidized college student loans actually did double July 1st when Congress failed to act, with both Democrats and Republicans blaming each other.
A bi-partisan group of senators reached agreement last night, a day after meeting with President Barack Obama. The deal would scale back the subsidize college student loan rate from 6.8% to 3.4%. Interest rates in the future would fluctuate with the market, though capped at 8.25%.
“But it’s very similar to the market-based approach that was supported by the House, by the President and, I really think, by the majority in the Senate,” Johanns says.
Johanns, a Republican, claims Senate Democratic leaders didn’t act to resolve the issue, because they wanted to keep it alive for political purposes.
Under the agreement, subsidize Stafford college student loan interest rates would remain at 3.4% through the 2015 academic year. Rates would fluctuate with the market thereafter, never going higher than 8.25% for undergraduate students; 9.5% for graduate students. The interest rate for parents taking out loans would top out at 10.5%.
The House approved legislation that would tie the interest rate on subsidized student loans to the 10-year Treasury note. It appears the two chambers can work out any difference prior to college classes starting in the fall.
The deal is expected to reduce the deficit by $715 million over the next ten years.