Washington – Connecticut’s House delegation split with the state’s U.S. senators Wednesday by voting for a bill that would lower interest rates on a popular student loan – at least temporarily.
The House approved the student loan bill on a lopsided 392-31 vote.
Every member of Connecticut’s House delegation supported the bill, which would lower interest rates on Stafford loans, which had shot up July 1 to 6.8 percent for undergraduates. Interest rates would be higher, however, for graduates and parents who borrow on behalf of their children.
The deal lowers the rate for undergraduates to 3.86 percent. But it also ties the interest rate of Stafford loans to the value of U.S. Treasury bonds, which means rates are likely to rise as the economy recovers.
Rep. Joe Courtney, D-2nd District, led the effort to sell the plan to House Democrats.
Like many lawmakers who supported the bill, Courtney said, “It isn’t perfect.”
But he said it was the best a divided Congress could do to help students enrolling for the fall term in the next few weeks.
“There will be real borrower certainty and protection,” Courtney said.
The student loan bill is a compromise approved by the Senate earlier this month between Democrats who wanted to freeze the rate at 3.4 percent and Republicans who liked a GOP House bill that tied the loans to market interest rates.
Richard Blumenthal and Chris Murphy, the state’s two Democratic senators, voted against the Senate deal because, they said, they were concerned rates would eventually rise so much that students would find it difficult to afford Stafford loans.
But Courtney said the Senate deal was a great improvement over a “reckless” bill that House Republicans had approved in May “that would subject students to unpredictable rates that would reset annually throughout the life of the loan and cost Connecticut students and their families more.”
While loan rates on the Stafford program will fluctuate under the compromise, they will be frozen for the life of a loan. The deal also lowered a cap on the interest rate, to 8.25 for undergraduates and higher for graduate students.
Courtney and other Connecticut Democrats who supported the bill, including Rep. Elizabeth Esty, D-5th District, said the bill’s approval is not the end of the issue and that they hope Congress modifies the program again before interest rates go up too much.
“Make no mistake, even with this bill’s passage, there’s much more to be done to make college affordable,” Esty said.
Rep. John Larson, D-1st District, commended Courtney for “his leadership on this issue.”
“While the fight to reduce student debt is far from over, this bipartisan legislation provides much needed relief for our students and their families,” Larson said.
Although Courtney and other Democratic supporters of the bill insisted it is a major improvement over the Republican bill approved in May, House Speaker John Boehner said it is “almost identical.”
“Going forward, the whims of Washington politicians won’t dictate student loan interest rates, meaning more certainty and more opportunities for students to take advantage of lower rates,” Boehner, an Ohio Republican, said.
The bill now goes to President Obama, who supports the legislation and is expected to sign it.