- Republicans: Some Republicans have also called for varying interest rates based on the market. House Republicans recently passed such a bill. Like Obama's plan, the interest rates on Stafford loans would be tied to the yield on 10-year Treasury bonds (plus 2.5 percentage points). Unlike Obama's plan, the Republican plan would not offer better rates for subsidized loans than unsubsidized loans. Also unlike the president's proposal, the rate would not be locked in over the life of the loan. It would vary, although it could be fixed after graduation. The Republican plan does cap how high interest rates could go, however, to 8.5 percent for Stafford loans. Senate Republicans have called for a plan that would also vary with the market, but lock in rates over the life of each loan. Like Obama's plan, Senate Republicans also don't offer a cap on rates.
So what does this mean for you?
Right now, we're in a bit of a wait-and-see holding pattern.The president has lambasted the House Republican bill and the parties remain far apart on the issue. The extension came down to the wire last year, and it's looking like this year will be similar.
We can't say for sure what will happen. But it's still worth filling out the FAFSA form if you haven't already, and looking into your loan options. Regardless of what happens to interest rates, federal subsidized loans typically have much lower rates and far more flexibility in terms of forgiveness and consolidation than loans from private companies.
And don't get discouraged. Even the leader of the free world had to contend with student loans. President and First Lady Obama finished paying off their own student loans nine years ago.
Also, we completely support rewarding yourself with a party when you do finally pay off those loans. We know we'll probably all be in senior assisted living facilities by then, but the Fusion digital team has already planned out some bingo ragers to celebrate. Bring the prune juice and we'll let you join in the fun!