More on Student Loans

The Good, the Bad, and the Ugly in the Student-Loan Deal
Over the past several weeks, the Bipartisan Student Loan Certainty Act has made its way through the Senate, the House, and on to the president’s desk for his signature. The new law is a 10-year plan that was billed as making student loans affordable.

But it is impossible to reduce the student-debt burden without answering two key questions: What is the cost of running a student-loan program? And which interest rate is the best for running a student-loan program? Unfortunately, the most recent loan-reform debate left both of these questions unanswered. Fortunately, the new law calls for a study to find answers. Only once that has happened will congressional and administration leaders be able to hold an informed debate to reach a fair plan. <Read more.> Via Christine Lindstrom, The Chronicle of Higher Ed.

Student-Loan Changes, With Lower Rates for Now, Are Set to Be Signed Into Law President Obama is expected to sign legislation on Friday that will lower federal student-loan interest rates­—for now, at least.
The law, known as the Bipartisan Student Loan Certainty Act of 2013, will allow all undergraduates to borrow at a 3.9-percent interest rate this fall and graduate students to borrow at 5.4 percent, with both rates tied to the 10-year Treasury note.

The new rate for undergraduates is significantly lower than the 6.8-percent level to which the rate on subsidized loans had risen in July, after Congress failed to come to an agreement to keep it from doing so.

Subsidized loans, which are available only to undergraduates who demonstrate financial need, account for about one-quarter of all new student loans. The rates on other types of student loans were already at 6.8 percent or higher. <Read more.> Via Lee Gardner, The Chronicle of Higher Ed.

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