Federal student loan interest rates lowered to 3.86 percent a year after record number of Fresno State students sought financial aid
President Barack Obama signed into law on Friday a student loan bill that will reduce the interest rates on subsidized student loans taken out after July 1.
The Bipartisan Student Loan Certainty Act of 2013, which was passed through the Senate and Congress by wide margins, will lower federal subsidized loan rates taken out by undergraduate students after July 1 to 3.86 percent.
Graduate student loan rates for the coming school year are fixed at 5.41 percent and PLUS loans – federal loans offered to graduate and professional degree-seeking students, as well as parents of financially dependent students – are set at 6.41 percent.
Interest rates on subsidized loans were set at 6.8 percent for both undergraduate and graduates students – doubled from the 3.4 percent interest rates that were in place last year for undergraduates.
The interest rate spike was a result of a stalemate in Congress. A solution for keeping the student loan rates at 3.4 percent was not reached by the July 1 deadline.
The bill imposes a cap guaranteeing that interest rates may never exceed 8.25 percent for undergraduates, 9.5 percent for graduates and 10.5 percent for PLUS loans.
Last year, a record number of Fresno State students sought financial aid. As of mid-September of last year, financial aid had been awarded to more than 17,000 Fresno State students.
Enrollment for the fall 2013 semester is expected to reach an all-time high of 22,710 students, Fresno State President Joseph Castro announced on Aug. 1.
This fall semester’s tuition for full-time undergraduate students ($3,143.50) is cheaper than last fall, a time when students faced uncertainty on whether tuition fees would be increased again amidst a state budget crisis that was eventually resolved with the Nov. 6 passage of Proposition 30, an initiative that raised the state sales tax and levied an increase on income taxes on the wealthy that helped stabilize state funding to higher education.
“Even though we’ve been able to stabilize the interest rates on student loans, our job is not done,” Obama said in a White House press release, “because the cost of college remains extraordinarily high.”
“It’s out of reach for a lot of folks, and for those who do end up attending college, the amount of debt that young people are coming out of school with is a huge burden on them; it’s a burden on their families.”
Student loan interest rates saw a gradual, yearly decrease since 2006, when rates were at 6.8 percent.
The Senate passed the bipartisan student loan bill 81-18 on July 24. Congress also passed it by a wide margin: 392-31 on July 31.