While all attention Wednesday was on the Republican House's
epic failure to do what no Congress has ever not done before—pass a transportation funding bill—they did actually get something done. They
passed the student loan interest rate bill.
The House of Representatives voted 392-31 in support of a bipartisan deal to lower interest rates on millions of new federal student loans. The Senate passed the bill on July 24 and President Barack Obama is expected to sign it into law. [...]
The legislation replaces a system in which Congress fixed interest rates every year and substitutes it with a market-based mechanism tied to the government's cost of borrowing and capped to protect borrowers in the event of a severe spike in rates.
It's an ostensible lower interest rate, 3.86 percent this year for undergraduates. That's as opposed to the 3.4 percent that had been in place, set by Congress and supported by the majority of Senate Democrats. The White House, however, had included the change in formula to tie rates to the Treasury rate in its budget, in the name of deficit reduction, of course. That gave Republicans and a handful of conservative Democrats enough leverage to fight for this new system.
It does remove one more annual squabble from Congress: they won't have to fight over where rates should be set any more. But it does it at the expense of variable interest rates that could go as high as 8.25 percent for undergraduates, 9.5 percent for graduate students, and 10.5 for parents borrowing for their children. Congratulations, students. Now you too have skin in the austerity game.