Congress passed a deal to temporarily lower student loan interest rates on Wednesday, affecting thousands of University of Minnesota students who rely on them to pay for school.
The bill ties interest rates on multiple student loans to the financial markets, which will lower rates for many borrowers. But if the economy improves as expected, those rates will rise with it.
For undergraduates taking out subsidized Stafford loans this fall, the plan will bring the interest rate down to 3.9 percent. While tied to the market, the bill caps the rate at 8.25 percent, according to the Associated Press.
The interest rate on subsidized Stafford loans doubled to 6.8 percent on July 1 after a slew of proposals to avoid the rate jump failed in both the House and the Senate.
More than 14,300 University students took out subsidized Stafford loans in 2012 — collectively worth about $54.7 million.
The new plan passed the House 392-31, according to the Associated Press. It was met with opposition from Minnesota Rep. Keith Ellison, who said he voted against the measure because it will likely increase the cost of school over time.
“We are undercutting the future opportunities of America’s children and compromising our economic vitality with the bill passed today,” Ellison said in a statement.
The Senate passed its version of the bill on July 24 in an 81-18 vote. Sen. Al Franken (D-Minn.) voted for the bill, which he said was “the best deal possible” in a press release.
“I still believe we need to address college affordability in a comprehensive way,” Franken said in the release, “and I intend to keep working on this issue because students shouldn’t be saddled with insurmountable debt when they graduate.”