Senators (finally) reach deal on student loan rates

The good news? The government has finally come to an agreement on student loan interest rates and agreed to lower rates through the 2015 academic year.

The bad news? After 2015, rates would likely climb higher than they were this past spring.

The deal is retroactive to July 1, when current legislation expired and Federal Stafford loans doubled from 3.4 to 6.8%.

Deal lowers student loan interest rates

Here are the interest rates for student loan borrowers this fall:

• Federal Stafford Loans (undergraduates): 3.85%
• Grad PLUS (graduate students): 5.4%
• Parent PLUS (parents of students): 6.4%

Rates could rise in future years

Under the new deal, student loan interest rates would be tied to the health of the economy. If the economy improves as economists predict, rates would increase in coming years.

However, as part of the new compromise, the Federal Stafford student loan rate would never go above 8.25% for undergraduate students. Graduate PLUS loan rates would never rise above 9.5%, and parents’ rates would top out at 10.5%.

Read the full article for more about the deal and its potential impact on current and future student loan borrowers.