Final Decision on Student Loan Rates, Pell Grants still pending

October 23, 2012

Late this week the stalemate in the US Senate over Student Loan Rates seem to have broken although the Federal Relations team continues to advocate for a permanent decision on this and the other major source of financial aid for FIU students: Pell Grants.

Student Loan Interest Rate Increase
After an earlier failed vote in the Senate, on Thursday, a bipartisan bill that would attempt to once again curb the Stafford Loan Interest Rates, which doubled last week from 3.4 to 6.8%. Under the agreement, rates for all Stafford loans would be tied to the 10-year Treasury note plus 1.8 percent with an annual interest rate cap of 8.25 percent. Currently this would give loans a 3.61 percent interest rate.


Graduate student loans would be set at the 10-year yield plus 3.8 percent and capped at 9.25 percent, which would yield a 6.31 percent rate currently under the plan.


This bill is very similar to a previous House proposal and thus, should it pass the Senate, has a very high possibility of ultimate enactment.

Earlier in the week, in a 51-49 vote, the Keep Student Loans Affordable Act (S.1238) did not get the opportunity to be heard on the floor. The bill would have paid for maintaining the original interest rates by closing certain tax loopholes.  Congressional action would have to take place by the first week of August to positively impact students as the Fall semester nears.


At FIU, over 21,000 students have a Stafford Loan – with an average indebtedness of $16,000.


Pell Grants
While the news about the student loan rates was less than desirable, students received some consolation in the fact that in the Senate FY14 Labor, Health, Human Services, and education Appropriations Bill, Pell Grants are proposed for an increase. The bill proposes a maximum award increase of $140 to $5,785.


Although the House’s own proposal has not been released, if enacted, this would be good news for FIU students given the fact that 16,146 (37%) depended on the Federal Pell Grant to help pay for their studies and 8,752 (20% of total pop. 54% of recipients) qualify to receive the maximum Pell award.


The House of Representatives have yet to present their Appropriations bill that would deal with Pell Grant funding.


For more information on overall impact of federal financial Aid, Click HERE