WASHINGTON, Aug. 1 (UPI) -- The U.S. House OKd a bipartisan bill that would tie federal student loan interests rates to market rates, sending the bill to President Obama for consideration.
The House voted 392-31 Wednesday to approve the Senate-passed measure for which Obama lobbied despite resistance from some liberal Democrats, The Wall Street Journal reported.
The legislation would link student loan interest rates to the yield on the 10-year treasury note.
Stafford loans for undergraduates would be set about 2 percentage points higher than the treasury yield, the Journal said. Loan interest rates for parents and graduate students would be set slightly higher than rates for undergraduates.
Congress failed to address the student loan rate before July 1, allowing the rate on some new student loans to double to 6.8 percent. While members from both parties vowed to prevent the rate hike, they disagreed about how to set rates for the long term.
The bill passed Wednesday would affect only new loans. Under the measure, undergraduates who take out loans for the coming school year would pay an interest rate of 3.86 percent for the life of the loan, based on treasury yields from the spring.
The bill caps the rate at 8.25 percent.
Some liberals said they opposed the measure because they feared rates would rise too high under the bill in coming years.
Bill supporters said tying student loan interest rates to the government's borrowing costs would protect taxpayers from losses and eliminate the need for lawmakers to revisit the issue.
