Senate reaches deal to keep student loan rates at 3.4%

From Inside Higher Ed:

WASHINGTON — With less than a week remaining until the interest rate on federally subsidized student loans is set to double, Senate leaders said Tuesday afternoon that they had agreed on a compromise to keep the rate at 3.4 percent for another year.

The $6 billion extension would be paid for in part by changing eligibility rules for subsidized loans, which are awarded based on financial need and on which the government pays the interest while borrowers are enrolled in college. Once students had been pursuing a bachelor’s degree for more than six years, or an associate degree for more than three, they would no longer be eligible to take out additional subsidized loans — a change that would save about $1.2 billion. The remainder of the cost would reportedly be covered by changes to pension laws, and the student loan measure might be combined with a federal transportation bill that also has a July 1 deadline for renewal.

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