Senators reach tentative deal on student loans - WRCBtv.com | Chattanooga News, Weather & Sports

Senators reach tentative deal on student loans

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By Kelly O'Donnell, NBC News

Senators on Wednesday reached a deal that, if passed, would fix the big jump in interest rates for federally backed student loans, sources told NBC News.

On July 1, rates went for new subsided Stafford loans doubled from 3.4 to 6.8 percent. Lawmakers on both sides of the aisle have decried the hike and have been working to figure out a deal since before students return to campus this fall.

The tentative deal reached Wednesday evening would base future fixed-interest rates for student loans on the ten-year Treasury bond plus an additional percentage, according to the sources.

Under the proposed deal, undergraduates this fall would be able access loans at a projected rate of 3.86 percent. Graduate students could borrow at 5.4 percent and parents could borrow at 6.4 percent.

And the agreement would set a long-term cap on undergraduate student loans at 8.25 percent, graduate students at 9.25 percent and parents' rate could be as high as 10.5 percent.

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