President Obama: Before I sign this, I just want to say thank you.
Maggie: On Friday, President Obama signed into law a student loan bill that will lower interest rates for government education loans.
An interest rate is a fee banks charge students for letting them borrow money. So, students have to pay back the entire amount of money they borrowed plus the fee as well.
The new bill ties the interest rates of student loans to the financial market, meaning the cost of the loan depends on how expensive or inexpensive it is for the government to borrow money.
Back on July 1st, Congress couldn’t agree on a new bill, and student loan interest rates doubled to 6.8%. With the new bill, loans for this fall’s undergraduates will drop to 3.9%. Rates for graduate students will fall to 5.4%. And parents can borrow at 6.4%. Because rates can rise year-to-year as the economy improves, the new bill puts a cap on interest rates so that no one will pay more than 10.5%.
This year, about 11 million students are expected to have lower interest rates, each student saving an average of $1,500.
But politicians had been debating the student loan bill all summer, leaving many students who should have been enjoying their summer vacation instead left worrying about their future debt.
Troy Krusz: It’s bad news for us students because we’re going to be in a bad situation, you know, when we get out.
Maggie: Also a college student with loans, Brianna Mullen works two jobs to help pay back her debt.
Brianna Mullen: I think it’s really unfair for students to be in this place where they can’t even bet on the next three years, you know. Or they can’t even bet that they’ll be able to finish their college degree and still be able to afford rent after they graduate, let alone even finding a job in their desired profession.
Maggie: The new bill has lowered Brianna’s interest rates, but President Obama says his work on the cost of education is not over.
Obama: The cost of college remains extraordinarily high. It’s out of reach for a lot of folks. And for those who do end up attending college, the amount of debt that young people are coming out of school with is a huge burden on them.
Maggie: Maggie Rulli, Channel One News.