U.S. Sen. Richard Blumenthal is not endorsing a new Senate compromise that would hold down interest rates on federally backed student loans but then link them to market rates. Under the deal loan rates for students taking out loans in future years could rise to as much as 8.25 percent.
USA Today is reporting that for the coming school year, the loan rate would be set at 3.86 percent before substantial increases in future years.
Previous Stafford Loans were capped at 3.4 percent, a rate that doubled to 6.8 percent for students taking out loans this fall when Congress failed to to intervene on July 1.
Blumenthal said he may propose an amendment when the Senate takes up the proposal, perhaps as soon as next week:
I am opposed to it at least right now — it has a variable rate that could balloon the level of payments out of control. The cap at 8.25 percent is way too high in my view. I’m considering amendments that would reduce the cap.