The Senate has approved a bipartisan plan that ties interest rates for student loans to the financial markets. The Senate voted 81 to 18 and it drew overwhelming support from Republicans while 17 Democrats voted no.
Some liberals are arguing that the new plan leaves out lower and middle income students who are vulnerable to the swings in the market. The plan helps maintain low interest rates in the short term but higher interest rates in the long term if the economy does recover.
Loans to undergraduates and graduate students and their parents under the plus program would be subject to a fixed rate tied to the 10 year treasury note, specifically the yield on the 10 year note as determined by the last auction held before each June. Liberal critics said that while interest rates are low now, economy forecasters are predicting a rise in interest rates considerably.
This really begs the question, should we be tying student loans into the financial markets given the instability of the current financial system? Are our student loan programs really safe if they're tied to the markets or is this a last-ditch effort to consolidate everything into a financial system that is bound to collapse in the next decade?
According to the Obama administration they have estimated that the fix would help 11 million borrowers who will take out loans this year. The new rates would apply to people who had only taken loans since July 1 of this year.
Do you have a student or family member who is going to be affected by these great changes? If so I decided to give you some links to read up on the new Senate approved student loan plan and you can read those links below.
“Congress has trouble with deadlines. I think we all know that,” said Senator Joe Manchin III, Democrat of West Virginia, who helped broker the deal. “We’re here today trying to fix the problem we have with the government’s student loan programs because we kicked the can down the road last year.”
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