Washington • After missing a key deadline, Congress finalized a deal Wednesday night to bring some certainty to student-loan interest rates. The bill sailed through the House, and Utah’s four representatives were united in their support for the legislation, which will negate the automatic doubling of the interest rate from 3.4 percent to 6.8 percent, which took place July 1 after legislators failed to act on an expiring law.
The new deal — approved 392-31 — differs only marginally from the original House bill, which passed narrowly along party lines in May. But it was enough to garner broad bipartisan support and get Democrats like Rep. Jim Matheson, D-Utah, to come on board. It now goes to President Barack Obama, who is expected to sign it into law.
Matheson voted against the original bill mainly because he was concerned the interest rate, linked to the market, wouldn’t be fixed for the life of the loan. Instead, they would be recalculated annually. Obama had similar concerns, and the compromise approved Wednesday allows for fixed-rate loans.
“There’s more certainty,” Matheson said of the Senate bill. “If the rate’s a floating rate, it makes it that much harder to plan for the future.”
He is glad the deal has no expiration, which should give students more stability in their borrowing, though if he drafted it, the rate available to students wouldn’t ebb and flow with the market.
“The nature of compromise is that a lot of people don’t think a bill is perfect, and I think this is a compromise bill I supported,” he said.
Rep. Jason Chaffetz, R-Utah, who backed the original legislation, was happy to see a version finally pass before students return to classes this fall.
“Students and families need certainty, and I’m glad they’re done tinkering with it over in the Senate,” he said. “I liked the House bill better, but we’ll live with what the Senate did. I think what they did was reasonable.”
The Senate debate on the issue was complicated by a group of liberal Democrats arguing for another one-year extension of legislation that would keep the rate at 3.4 percent.
But in the end, a large bipartisan majority of the Senate — 81 members — voted for a bill that mixed the House’s plan with Obama’s wishes. Of the 18 opposed, all but one were Democrats, who were still holding out for a lower rate. The lone Republican voting “no” was Sen. Mike Lee, R-Utah, who felt the whole debate “distracts from the more serious problems undermining our higher-education system, our economy, and especially students and their families.”
The Senate’s offering, which the House accepted, links the interest rate to the high-yield 10-year Treasury note and is kinder to undergraduate borrowers than the original House bill by less than half a percentage point.
Students taking out undergraduate federally subsidized or unsubsidized loans this summer would pay 3.9 percent. That rate rises to 5.4 percent for graduate students, and to 6.4 percent for those taking out PLUS loans.
The bill also ensures the interest rate won’t surpass 8.25 percent for undergraduates, slightly lower than the House’s original plan.
House Speaker John Boehner said he was glad that Democrats came around to a position similar to the one championed by Republicans.
“Going forward, the whims of Washington politicians won’t dictate student-loan interest rates, meaning more certainty and more opportunities for students to take advantage of lower rates,” he said.
Utah House members unanimous
Republican Reps. Rob Bishop, Jason Chaffetz and Chris Stewart all voted for the compromise bill Wednesday as did Democratic Rep. Jim Matheson. In an earlier Senate vote, Republican Sen. Orrin Hatch voted yes and Sen. Mike Lee voted no. Lee was the only Republican to vote against the bill.