The Washington Post

Congress approves student loan plan

The millions of college students and parents who will borrow money from the federal government for the coming school year can plan on much lower interest rates than originally offered, as the U.S. House overwhelmingly voted 392 to 31 on Wednesday to approve a Senate plan that would allow interest rates to move with the financial markets.

The plan now goes to President Obama, who has already voiced support. House Republican leaders have deemed this a long-term solution, while many Democrats have said this plan will probably need tweaking in future years.

Undergraduates who take out federal loans for the coming school year can expect an interest rate of 3.86 percent, while the rate for graduate students will be 5.41 percent. The interest rate for PLUS loans, available to graduate students and parents of students, will be 6.41 percent. All of those rates are lower than current fixed rates of 6.8 percent for Stafford loans and 7.9 percent for PLUS loans.

These rates will apply to loans taken out since July 1 and will lock in for the lifetime of the loan. The plan calls for limits on how high the rates can go: 8.25 percent for undergraduates, 9.5 percent for graduate students and 10.5 percent for PLUS loans. If the economy improves, rates on future loans are expected to surpass the current rates. Democrats have said they hope to again take action before that happens.

This rate change has been in the works for months, prompted by the July 1 expiration of a reduced interest rate on one type of loan taken out by mostly low- and middle-income undergraduates. In May, the House approved a plan that would tie interest rates to the market but allow those rates to change over the lifetime of the loan. The plan was also expected to generate hundreds of millions of extra dollars for the government over a decade. Obama threatened to veto that plan if it advanced.

In the Senate, a bipartisan group spent weeks negotiating under ever-increasing pressure from the White House. The final compromise was approved by the Senate last week.

House GOP leaders have seized upon this issue as an opportunity to declare victory and criticize Senate Democrats. At a Wednesday morning news conference, House Speaker John A. Boehner (Ohio) said: “I congratulate the Senate for finally getting this bill over to us.” House Majority Leader Eric Cantor (Va.) said he was “very, very excited the Senate and White House decided to set politics aside and come down on the side of the students.” And House Majority Whip Kevin McCarthy (Calif.) praised his colleagues for acting “early, long before the deadline.”

House Minority Leader Nancy Pelosi (D-Calif.) has brushed off such celebration.

“The bill passed by the Senate is far superior to what happened here in the House,” Pelosi said at a news conference last week. “And if they want to take credit for calling attention to the shortcomings of the bill that were corrected in the Senate, well, they can take credit for that.”

Jenna Johnson is a political reporter who is covering the 2016 presidential campaign.

The Freddie Gray case

Please provide a valid email address.

You’re all set!

Campaign 2016 Email Updates

Please provide a valid email address.

You’re all set!

Get Zika news by email

Please provide a valid email address.

You’re all set!
Show Comments
The Democrats debate Thursday. Get caught up on the race.
The big questions after New Hampshire, from The Post's Dan Balz
Can Bernie Sanders cut into Hillary Clinton's strength in the minority community and turn his challenge into a genuine threat? And can any of the Republicans consolidate anti-Trump sentiment in the party in time to stop the billionaire developer and reality-TV star, whose unorthodox, nationalistic campaign has shaken the foundations of American politics?
Clinton in New Hampshire: 2008 vs. 2015
Hillary Clinton did about as well in N.H. this year as she did in 2008, percentage-wise. In the state's main counties, Clinton performed on average only about two percentage points worse than she did eight years ago (according to vote totals as of Wednesday morning) -- and in five of the 10 counties, she did as well or better.
Upcoming debates
Feb. 11: Democratic debate

on PBS, in Wisconsin

Feb 13: GOP debate

on CBS News, in South Carolina

Feb. 25: GOP debate

on CNN, in Houston, Texas

Campaign 2016
Where the race stands

To keep reading, please enter your email address.

You’ll also receive from The Washington Post:
  • A free 6-week digital subscription
  • Our daily newsletter in your inbox

Please enter a valid email address

I have read and agree to the Terms of Service and Privacy Policy.

Please indicate agreement.

Thank you.

Check your inbox. We’ve sent an email explaining how to set up an account and activate your free digital subscription.