WASHINGTON (8/2/13)--Legislation that would return the federal student loan rate to 3.4%, after it shot up to 6.8% in July, now needs only President Barack Obama's signature to become law.
The bill, known as the Bipartisan Student Loan Certainty Act, passed the U.S. House on a 392-31 vote this week. The Senate approved the bill last week.
The federal student loan rate, which was capped at 3.4%, increased to 6.8% on July 1 when members of Congress could not agree on legislation to address the issue.
The legislation approved this week would tie student loan interest rates to the 10-year Treasury note. Individual rates would be locked in for the life of the loan. Students and their families would also be protected for sharply increasing interest rates: Undergraduate loans could not exceed an interest rate of 8.25%.
The bill would save undergraduates $25 billion in student loan payments, and result in $3,300 less interest being charged per undergraduate student loan, according to congressional estimates.
Caps of 9.5% for graduate student loans and 10.5% for PLUS loans would also be set.
On the private student loan front, the National Credit Union Administration has told the Credit Union National Association that the agency will be releasing examiners' guidance on private student loans in the near future. The guidance will then be shared with credit unions.