After a long summer of student loan interest debate, the President is ready to sign the bipartisan bill.
According to the Associated Press, President Barack Obama is set to sign a bill Friday, agreed upon by Democrats and Republicans, on the hotly debated fate of federally subsidized student loan interest rates.
The compromise will lock the rates in with financial market shares, as Republicans wanted, making them very affordable for students this year. They will also not fluctuate, as Democrats wanted, during the academic year and must stay consistent throughout.
About 11 million students will save an average of $1,500 this year due to the bill that is all but passed.
Because the interest rates will be tied to the market, the government can currently borrow money for cheap. As the economy improves, as it is expected to in the coming years, it will become more expensive to borrow and that will be passed on to students.
For undergraduates, the rates will be locked at 3.9 percent, 5.4 percent for graduate students and 6.4 for parents. The bill has also set a cap on how high the interest rates can climb and will not exceed 8.25 percent for undergraduates, 9.5 for graduate students and 10.5 for parents. However, the Congressional Budget Office predicted rates would not get that high at least within the next ten years.
Student loan reform bills were mired in disagreement this summer and failure for both sides to agree caused Stafford loan interest rates to double. On July 1, Congress could not agree on to keep Stafford loan interest rates at 3.4 percent and, as a result, they jumped to 6.8 percent, a move that left many lawmakers shaking their heads in disappointment.
White House spokesman Jay Carney acknowledged the importance of the bill, but said it is only part of the solution to rising costs of tuition.
"Even with this important bill signed into law," Carney said in a statement, "much work remains to ensure college stays within reach for middle-class families and those striving to get into the middle class."
