Alexander: Senate Action On Student Loans Lowers Interest Rates For 200,000 Tennesseans Going To College This Fall

Wednesday, July 24, 2013

The Senate on Wednesday passed a bill sponsored by Senator Lamar Alexander (R-Tn.) that would lower student loan interest rates for 200,000 Tennesseans going to college this fall.

Rates on all new undergraduate loans taken out this year since July 1 will be 3.86 percent, cutting the current rate nearly in half.

Senator Alexander, the senior Republican on the U.S. Senate education committee and former secretary of education, said, "This permanent, market-based plan makes students’ loans cheaper, simpler and more certain. It ends the annual game of Congress playing politics with student loan interest rates at the expense of students planning their futures."

The Bipartisan Student Loan Certainty Act, sponsored by a bipartisan group of senators including Alexander and Joe Manchin (D-W.V.), Richard Burr (R-N.C.), Angus King (I-Me.), Tom Coburn (R-Ok.), Tom Carper (D-De.), Tom Harkin (D-Ia.), and Dick Durbin (D-Il.), will lower rates immediately for all students this year from the current rates of 6.8 and 7.9 percent and will tie rates on all new loans to the market.

Senator Alexander said, “This plan is fair to taxpayers and fair to students. It’s realistic because it’s market-based, which means it’s based on what it costs the government to borrow money. And the rates are fixed for the life of the loan, which provides certainty to students and parents.”

The Bipartisan Student Loan Certainty Act: 

  • Affects all new loans taken out after July 1 this year
  • Reduces interest rates on new loans for 11 million borrowers taking out 18 million loans totaling about $106 billion this year
  • Establishes for the first time a single rate on undergraduate loans, which are approximately two-thirds of all loans
  • Allows borrowers to benefit from the market’s current low interest rates and gives borrowers certainty by locking in rates for the life of the loan
  • Saves taxpayers $715 million over 10 years, according to the Congressional Budget Office
  • Protects students by limiting how high their interest rates can rise

The bill ties rates to the government’s 10-year borrowing cost, specifically the yield on the last auction before June of each year of the U.S. Treasury 10-year Note. This year, that yield is 1.81. The rates for undergraduate loans are the 10-year Note plus 2.05 percentage points—an addition to cover costs of defaults, collections, deferments, forgiveness, and delinquency. So, this year, all undergraduate rates would be 3.86. Undergraduate rates are also capped at 8.25, so students will never have to pay more than 8.25 percent interest on their loans.

The rates for graduate Stafford loans are the 10-year Note plus 3.6 percentage points. So, this year, those rates will be 5.41 percent. They are capped at 9.5 percent.

Rates on PLUS loans to parents and graduate students will be the 10-year Note plus 4.6 percentage points. This year, those rates will be 6.41 percent. They are capped at 10.5 percent.



Corker, Alexander, Perdue Back Launch Of Tax Reform Effort

Senators Bob Corker, Lamar Alexander and David Perdue were among those voting for a budget resolution that carries the procedural tools requested by Senate leadership to kick-start the legislative process on tax reform.   The Senate version of the fiscal year 2018 budget resolution passed by a vote of 51 to 49.   “The sole purpose of this budget resolution ... (click for more)

Jay's Owner Says She Was Drinking At Wilder Street Bar Because It Was A Surprise Party In Her Honor

Jay’s bar at 1914 Wilder St., has been cited to the beer board several times in the past and punished with the suspension of its beer license multiple times since 2013. At the Thursday morning meeting of the beer board, the owner of the business was cited again on Sept. 28, for several of the same reasons. A routine bar check conducted by Chattanooga patrol officers on a Thursday ... (click for more)

The Deer Decline At Enterprise South Nature Park

There are now 11 fewer deer to see at Enterprise Nature Park. The hunters snuck another one in secretly so as not to cause controversy.   I go to that park three or four times a week, and haven't seen any deer for months, and I used to see them all the time. They had to put out "salt licks" to attract deer from surrounding areas outside the park. Then they killed them ... (click for more)

Roy Exum: At Last! New Schools

In this me-me-me-only-me world of today, we-we-we-finally got a thrilling $125 million facility plan for the Hamilton County Department of Education on Thursday night. The School Board unanimously approved a well-thought-out “first Band-Aid” that will provide a new elementary school in Harrison, middle schools in East Hamilton and Howard, and a quite-satisfactory answer to move ... (click for more)

Baylor Wins State Volleyball Title

MURFREESBORO, Tenn. – There were tears on both sides of the court at MTSU’s Murphy Center Thursday afternoon. There were tears of relief and joy for the Baylor Lady Red Raiders while the tears for the Briarcrest Lady Saints represented heartbreak and disappointment. Such is the case when two really good volleyball teams meet for the second straight year for a D-II Class AA ... (click for more)

Lanters Are Latest Sister Acts Leading Lady Flames Teams

When one looks back on the success of the Lee University women’s soccer program over the past 16 years, it is easy to see what sisters have provided. Records show the surge began in 2001 and continues today with senior Summer and freshman Anna Lanter (former Soddy Daisy High School standouts) helping spark the Lady Flames to a current 8-4 overall mark and 7-2 in the rugged Gulf ... (click for more)