Student Loan Proposal Means Low Interest Rates Now, Cost Savings Later

Last week Senators Coburn (R-OK) and Burr (R-NC) introduced a bill that would replace the arbitrary interest rates on newly-issued federal student loans with rates linked to 10-year U.S. Treasury notes, plus 3.0 percentage points. Our sister blog, Ed Money Watch, explained in an earlier post how the proposed policy would make interest rates on student loans more responsive to changes in the market and allows student loans to reflect today’s low interest rate environment.  Fixed rates on all loans issued this coming school year would be about 4.75 percent. What’s more, the proposal is budget neutral in the long run, even under the Congressional Budget Office’s most recent estimate—but there is a catch.

To read the full post, visit Ed Money Watch.