By Jennifer Liberto, CNNMoney
Washington (CNNMoney) - The House on Wednesday approved a bipartisan that ensures lower interest rates on loans for students heading to college this fall.
Members of the House voted 392 to 31 to lower rates for undergraduates taking out government loans this school year to 3.86% - cheaper than the 6.8% interest rate that kicked in on July 1. The new rates would be retroactive and apply to loans taken out after July 1.
The bill, which passed the Senate last week, will now go to the President Obama's desk to be signed into law.
It has provisions for rates to go higher in coming years.
By Jennifer Liberto, CNNMoney
Washington (CNNMoney) –The Senate on Wednesday approved a bipartisan deal that ensures lower interest rates on loans for students heading to college this fall.
Senators voted 81 to 18 to lower interest rates for undergraduates taking out government loans this school year to 3.86% - cheaper than the 6.8% interest rate that kicked in on July 1. The new rates would be retroactive and apply to loans taken out after July 1.
However, the bill has provisions for rates to go higher in coming years. It is expected to become law, with support from the White House and the House of Representatives, which will likely take up the bill in coming days.
"This fall, all undergraduates, subsidized or unsubsidized, would only have to pay 3.86% interest rate for the life of the loan," said Sen. Tom Harkin, an Iowa Democrat, whose support was key to a Washington deal. "That means real savings for borrowers."
It doesn't apply to loans that students get from private lenders. It only affects Stafford loans, which are made by the U.S. government to help finance a college education. Students can apply through their university financial aid office. The loans are limited to no more than $5,500, for a mix of subsidized and unsubsidized loans for the freshmen year and $7,500 for juniors and above.
On July 1, the interest rate on subsidized Stafford loans doubled from 3.4% to 6.8%.
By Ted Barrett, CNN
Washington (CNN) – A bipartisan group of senators announced an agreement on a student loans package Thursday that would cap rates, ending a standoff that lasted months and broke through a July 1 deadline for finding a solution.
Under the compromise measure, undergraduate students would pay a rate of 3.85% next year on subsidized and unsubsidized Stafford loans. The plan would cap rates on loans to undergrads at 8.25%, for graduate students at 9.5% and parents at 10.5%.
"While this is not the agreement that any of us would have written, and many of us would like to have seen something quite different, I believe we have come a very long way on reaching common ground," Sen. Dick Durbin of Illinois, the Democratic whip in the Senate, said at a press conference Thursday.
Sen. Tom Harkin, the Democratic chairman of the committee that oversees federal education programs, also was present in announcing the deal. The Iowa senator had resisted for weeks agreeing to a plan unless it included caps on how high the interest rates on the loans could rise.
By Ted Barrett and Ashley Killough, CNN
(CNN) - Rep. Lynn Jenkins, R-Kansas, faulted Senate Democrats on Saturday for this week's hike in student loan interest rates and urged the upper chamber to pass legislation that resolves the issue as soon as the holiday recess ends.
"For too long, politicians have been in charge of setting these rates, and we keep coming back to cliffs and deadlines like this one," Jenkins said in the GOP weekly address. "Paying for college is difficult enough without all this uncertainty. I have two kids in college, I know how hard it can be."
The interest rates on some student loans officially doubled Monday – to 6.8% from 3.4% – after the Senate failed to reach a compromise by the July 1 deadline.
The hike hits about seven million new subsidized Stafford loans this year for middle- and low-income students, but does not apply to existing loans.
Negotiators are stuck largely on the question of whether to require an overall cap above which interest rates on new loans could not rise.
By Jennifer Liberto, CNNMoney
Washington (CNNMoney) - Students preparing to take subsidized government loans will see their interest rates double to 6.8% from current levels, starting Monday, July 1.
But hope isn't lost yet. Lawmakers are working hard behind the scenes trying to strike a deal to save the 7 million college students who are slated to take the subsidized federal Stafford loans this year.
Senate Democratic leaders are throwing their weight behind a bill that would extend the 3.4% rates for another year, just as Congress did last year.
House Republicans have said they'd prefer a longer term solution, like the one they passed back in April to keep rates low for now but rise along with market rates in the future.
Students are being told to prepare for the worst and hope for the best.
"We're advising our schools to tell students that their subsidized Stafford interest rates are going to be 6.8% on July 1," said Justin Draeger, president of the National Association of Student Financial Aid Administrators.
By Melanie Hicken, CNNMoney
New York (CNNMoney) - Firms offering student loan "debt relief" are deceiving borrowers into paying hundreds or even thousands of dollars for access to free government programs, according to a recent consumer watchdog report.
With student loan debt soaring to record levels, many graduates are turning to companies that claim to help reduce or manage their debts. However, some of these firms are charging borrowers initial fees as high as $1,600 and monthly fees as high as $50 to secure services that these borrowers could otherwise get for free, according to the report from the National Consumer Law Center.
While the government offers several relief programs free of charge, such as repayment plans based on a borrower's income level, getting through the red tape is "rarely easy," according to the report. And many borrowers are unaware that the programs even exist in the first place.
To conduct its investigation, undercover NCLC "mystery shoppers" contacted 10 randomly selected student loan relief companies, analyzed websites and reviewed a variety of actual contracts and consumer complaints. They found that the majority of firms surveyed didn't inform potential clients that the products they offered - most frequently loan consolidations - were actually free government programs, or the companies buried that information in the fine print.
By Claire Potter, Special to CNN
Editor's note: Claire Potter is a professor of history at the New School for Public Engagement. She blogs at Tenured Radical for the Chronicle of Higher Education.
(CNN) - New York University's 2010 graduating class owed a total of more than $600 million in student loans. It's unlikely the university will forgive them. But NYU has forgiven portions of mortgages they have extended to President John Sexton, other university executives or star faculty - money that has been used to buy properties in Manhattan or vacation homes in the Hamptons.
Does this shock you?
Or, how about this: Treasury Secretary Jack Lew, a former executive vice president at NYU, received an "exit bonus" of $685,000. Just to put this in perspective, Lew's NYU exit bonus alone would have provided free tuition for 275 undergraduates, or a little more than 17% of the incoming class.
The revelations about lavish compensation packages at New York University (my alma mater) have raised a firestorm of criticism. Faculty critics have already publicized NYU's top executive salaries: Sexton takes home nearly $1.5 million, Vivien Lee, the vice dean of science gets $1.1 million, and Robert Grossman, the dean of the medical center, makes a whopping $3.5 million.
By Jennifer Liberto, CNNMoney
Washington (CNNMoney) - When Kelly Mears graduates from Union College in the summer of 2015, she will have $100,000 in student loans.
Armed with a political science degree, Mears will join more than a million Americans who have racked up breathtaking amounts of student debt.
Mears is also one of 7 million undergraduates caught in the middle of a debate in Washington over government-subsidized student loans, as interest rates are set to double to 6.8% from 3.4% on July 1.
"It just seems to be a part of the growing American experience to go to school, graduate and work off that debt for the rest of your life," Mears said.
Super-borrowers with $100,000 of student loan debt aren't the norm. The average student graduates with $27,000 of loan debt.
The New York Fed said those who borrow $100,000 or more are about 3.1% of borrowers nationwide. But it's easy to see how students get there, with four years of private college tuition running $116,000 on average, according to the College Board.
(CNN) - Christine Romans asks former Education Secretary William Bennett about the proposed Student Loan Fairness Act and rising tuition costs.
By David J. Skorton, Special to CNN
Editor’s note: David J. Skorton is president of Cornell University and professor in the Departments of Medicine and Pediatrics at Weill Cornell Medical College and in Biomedical Engineering at Cornell’s College of Engineering. A former president of the University of Iowa, he is a board-certified cardiologist, past chair of the Business-Higher Education Forum and life member of the Council on Foreign Relations.
(CNN) - As college admissions notifications go out over the next several weeks, there is no doubt that the cost of college is a growing concern. Students and families are trying to figure out how to get the most out of the college experience and the best value for their investment.
The interactive College Scorecard that President Barack Obama announced in his 2013 State of the Union Address provides the average “net price” of attendance - that is, tuition minus the average amount of financial aid. (As the scorecard notes, it is important to get more specific cost information by using the financial aid calculator on each college’s website.)
Promised, but not yet available in the scorecard, is a summary of the kinds of jobs that students find once they graduate and how much they earn. This information may be of limited utility, however, because, as Harvard President Drew Faust has pointed out, the value of a college degree should not be judged solely on the first job acquired, but it should be “a passport to a lifetime of citizenship, opportunity, growth and change.”
How can students and families navigate these confusing and ever-changing waters? As a university president whose institution received nearly 40,000 applications for admission this year, as someone who is responsible to see the big picture - and as someone who has been through the college selection process with members of my own family - I know that a substantial part of college choice must belong to the student. It must encompass facts, but also the “feel” of the college and the fit with the student’s background, personality and interests.
So, students, here are some things, beyond the College Scorecard, to consider in deciding which colleges provide value for you.