finance
House Resolution 1386 Proposes 2 Percent Cap on Federal Student Loan Rates
A bipartisan measure would lower rates on new and existing federal student loans to 2 percent and refinance them automatically through the Department of Education. The bill has been referred to the House Rules Committee. Supporters say it would ease repayment burdens for millions of borrowers holding $1.69 trillion in debt.
Audio version
Tap play to generate a narrated version.
Developing·Limited corroboration so far. This page will refresh as more sources emerge.
House Resolution 1386 would cap interest rates on federal student loans at 2 percent and apply the rate retroactively to existing borrowers. The measure would also direct the Department of Education to refinance loans automatically while permitting borrowers to opt out if they prefer current terms.
Current rates stand at 6.52 percent for undergraduate loans, 8.07 percent for graduate loans and 9.07 percent for PLUS loans, Newsweek reported.
Americans hold about $1.69 trillion in federal student-loan debt, with an average balance of roughly $39,547 per borrower. Representative Mike Lawler, a Republican from New York, said the change would give borrowers flexibility to pay off debt without the added cost that has become synonymous with higher education. The resolution has been referred to the House Rules Committee.
Alex Beene, a financial-literacy instructor at the University of Tennessee at Martin, told Newsweek that lower rates would reduce monthly payments for borrowers carrying sizable balances. Kevin Thompson, CEO of 9i Capital Group, noted that reduced rates would lower borrowing costs for existing borrowers but could encourage excessive new borrowing.
com, said capping rates at 2 percent when the 10-year Treasury yield is around 4.4 percent would cost the federal government roughly $16 billion over 10 years.
Passage would require approval by both chambers of Congress and the president.
