WASHINGTON - A bipartisan bill that would reduce the costs of borrowing for millions of students passed the House on Wednesday and was heading to President Barack Obama for his signature.
The legislation links student loan interest rates to the financial markets, offering lower rates for most students now but higher ones down the line if the economy improves as expected. Even as they were preparing to pass the bill, many lawmakers were already talking about a broader approach to curbing fast-climbing costs.
"Going forward, the whims of Washington politicians won't dictate student loan interest rates, meaning more certainty and more opportunities for students to take advantage of lower rates," House Speaker John Boehner said.
The measure passed 392-31.
Undergraduates this fall would borrow at a 3.9 percent interest rate for subsidized and unsubsidized loans. Graduate students would have access to loans at 5.4 percent, and parents would borrow at 6.4 percent. The rates would be locked in for that year's loan, but each year's loan could be more expensive than the last. Rates would rise as the economy picks up and it becomes more expensive for the government to borrow money.
But for now, interest payments for tuition, housing and books would be less expensive under the House-passed bill.
"Changing the status quo is never easy, and returning student loan interest rates to the market is a longstanding goal Republicans have been working toward for years," said Rep. John Kline, the Republican chairman of the House Committee on Education and the Workforce. "I applaud my colleagues on the other side of the aisle for finally recognizing this long-term, market-based proposal for what it is: a win for students and taxpayers."
The House earlier this year passed legislation that is similar to what the Senate later passed. Both versions link interest rates to 10-year Treasury notes and remove Congress' annual role in determining rates.
"Campaign promises and political posturing should not play a role in the setting of student loan interest rates," said Rep. Virginia Foxx, R-N.C. "Borrowers deserve better."