On August 9, President Obama signed the Bipartisan Student Loan Act of 2013, which lowers Federal Student loan rates, retroactive to July 1, 2013. The new Federal student loan rates for the current year starting July 1 will be 3.86% for Federal student loans for undergraduates, 5.41% for Federal student loans for graduate students, and 6.41% for Federal PLUS loans (loans that parents take out for their children).
These new rates for Federal student loans are lower than the student loan rates that went into effect on July 1.
Going forward, the rates for Federal student loans will be pegged to the rate for 10-year Treasury bonds, unlike the fixed Federal student loan rates of the past. This means that the rates will go up as the rates for the 10-year Treasury bonds go up, as they are expected to do. The Institute for College Access & Success projects that by 2016, the new rates for Federal student loans will exceed 7%, and by 2018, 8%. The new law includes caps on the Federal student loan rates, but they are 8.25% for undergraduate loans, 9.25% for graduate loans, and 10.5% for PLUS loans. The Project on Student Debt has created a summary sheet of details about this year’s loan rates.
President Obama noted that the cost of college remains “extraordinarily high,” and expressed hope that the same coalition that passed this legislation will take additional steps to address the problem.