U.S Senator Bill Nelson is not okay with the hike in federal student loan interest rates for students of the colleges. As such, he has declared his intention to file legislation that will work against this hike.
The bill would propose the cut down of interest for undergraduates from 8.25 percent to 4 percent. Likewise, the bill will make it possible for borrowers having preexisting loans at rates greater than 4 percent to refinance – presently, this is not feasible, but the bill will address this.
Nelson set to file the legislation
According to a press release on Wednesday, Nelson pointed that higher education must be affordable if it must be accessible; he added that students should get a loan at the rate of 4 percent if the home loan can be gotten at a rate of 4%.
As usual, the just celebrated Independence Day in the U.S comes with a new loan rate for students, and that will go into effect by 1st July. Nelson is against the new loan rate for students.
Announcement comes as a disappointment
While so many students aspire to be college students soon, the announcement of the new student’s loan rate came as a disappointment. Up from a significant rate since 2014, the rate for both subsidized and unsubsidized interest rates increased to 4.45 percent. Likewise, there is an increase in the unsubsidized loan for graduate students to 6 percent and an increase to 7 percent for undergraduate students’ parents.
The 10-year Treasury Note auction that took place in May resulted in an increased yield, from 1.71 percent from the last year to a 2.40 percent – signaling a weak investment in Treasuries following the trust in the nation’s economy. Undoubtedly, this resulted in decreased bond prices and increased interest rates.
The proposed legislative action by Nelson will work to eradicate fees involved in processing students’ loan. Currently, the processing fee is at 1.069 percent for all new subsidized and unsubsidized loans and stands at 4.276 percent for PLUS loans – all deducted from the principal loan.
Nelson doesn’t plan to cap federal student loan rates for undergraduates alone; he added that he’s also set to cap the rate for parents of undergraduates at six percents, as well that of graduate students at 5 percent. Nelson revealed that he’d file the bill during the 115th Congress reconvention.