There may finally be a bi-partisan deal in the Senate that will lower student loans, at least for now, after interest rates on new subsidized Stafford loans doubled at the beginning of July. But from the AP report on the deal, it looks like those rates could climb back up, or go even higher, if the economy improves in the coming years.
But first, here's what the AP, citing unnamed aides for Democratic and Republican Senators, says students taking out new loans can expect, assuming the deal becomes law:
Under the deal, all undergraduates this fall would borrow at 3.85% interest rates. Graduate students would have access to loans at 5.4% and parents would be able to borrow at 6.4%.
In July, the new interest rate for subsidized Stafford loans jumped from 3.4 percent to 6.8 percent. So the 3.85 rate in the deal is nearly back to normal. And, according to Politico, who spoke to Republican Lamar Alexander, that rate will be retroactively applied to any new loans taken out after July 1. But the rate won't last forever. In 2015, the AP explains, things could change dramatically:
The interest rates would be linked to the financial markets, but Democrats won a protection for students that rates would never climb higher than 8.25 percent for undergraduate students. Graduate students would not pay rates higher than 9.5 percent and parents' rates would top out at 10.5 percent.
They report that lawmakers could vote on the deal as early as tomorrow, but further action might have to wait until next week. We'll update this post on a developing story with new information as it becomes available.