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Students caught in the crossfire as Congress debates college loan rates



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Bishop fears student loan rates kept artificially low by government encourages young people to get into more debt than they can handle.

But Tashnizi thinks making education affordable should be a top priority for lawmakers.

At a glance

Taking a stand on student loans

The president’s position » President Barack Obama wants to set the interest rate for federally backed student loans at a little less than 1 percentage point above the rate charged for 10-year Treasury notes. He wouldn’t place a cap on how high the interest rate could go, but would lock in the rate for the life of the loan.

The House bill » The House-passed measure would set the interest rate on all Stafford loans at the rate of high-yield 10-year Treasury notes plus 2.5 percent. That would put the current rate at around 5 percent. Tied to the market, the amount of interest students pay would move up and down annually, but would be capped at 8.5 percent.

The Senate’s plan » A bipartisan Senate coalition has put forward a plan meant to bridge the gap. It offers different rates for undergraduate, graduate and PLUS loans, with undergraduates getting the lowest rates. All rates would be tied to the interest rate of a high-yield 10-year Treasury note and locked in for the life of the loan. Based on current Treasury note rates, all of the loan rates would be lower than the 6.8 percent that would kick in without action.

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"Given the state of the economy," she said, "I don’t think it’s wrong to ask the government for a helping hand in this situation."

imarkham@sltrib.com




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