House Minority Leader Nancy Pelosi (D-Calif.) called the student loan interest rate plan approved by the Democrat-led Senate on Wednesday evening a "vast improvement" over the plan approved by the Republican-led House earlier this year. She said the new legislation has broad support in the House, and she plans to vote for it.
The Senate's plan would tie the interest rates on most federal education loans to the market, replacing the current system of having a fixed rate for years on end. For the coming school year, undergraduates could lock in loans with a 3.86 percent interest rate, down from the current 6.8 percent. Graduate students would have a rate of 5.41 percent, down from 6.8 percent. And PLUS loans, which are taken out by graduate students and parents, would have a 6.41 percent rate, down from 7.9 percent.
In coming years and as the economy improves, these rates are expected to increase. The plan would not allow the rates to exceed 8.25 percent for undergraduates, 9.5 percent for graduate students and 10.5 percent for PLUS loans.
"I believe the bill passed by the Senate is far superior to what happened here in the House," Pelosi said. "The fact is, this is a far superior bill. When it comes back here, it isn't a bill that we would have written, but it is a bill that can pass."
The House's plan had been to tie the interest rates to the market and allow those rates to change over the lifetime of a loan. The Senate plan locks in the interest rate at the time the loan is taken out, starting with loans taken out since July 1. A vote in the House is expected next week, which would allow lawmakers to finalize these rates before the academic year begins.
Pelosi echoed the sentiments of many Democrats in the Senate who have said that while this bill has been pitched by supporters as a long-term solution, they plan to revisit the topic before rates spike.
"It's the best that we can do at this time," Pelosi said, "and we would hope that we could revisit the bill before too long."