A Market for Interest Rates on Student Loans
Republicans, and leading higher education and budget experts, Chairman John Kline (R–MN) and Representative Virginia Foxx (R–NC) introduced H.R. 1911, the Smarter Solutions for Students Act. This commonsense legislation simply moves all federal student loans (except Perkins loans) to a market-based interest rate. Under the bill, student loan interest rates would reset once a year and move with the free market, much like they did from 1992 to 2006. Interest rates for subsidized and unsubsidized Stafford loans would be based off of the 10-year Treasury Note plus 2.5 percent, capped at 8.5 percent. Interest rates for graduate and parent PLUS loans would be based off of the 10-year reasury Note plus 4.5 percent, capped at 10.5 percent.