Congress passes bill to keep student loan interest rates from doubling

US students were handed an eleventh hour reprieve from higher loan rates on Friday as Congress passed a bill nixing the scheduled hike.

The doubling of interest payable on college loans was due to come into force on Sunday, with President Barack Obama blaming inaction in Washington for threatening an increase that would have put the squeeze on some 7.4 million young Americans.

But as the clock ran down on lawmakers to reach a deal, both sides in Congress back away from demands that looked set to scupper the bill being passed.

A new legislative wrap was proposed, taking in the anchoring of low student loan rates alongside a commitment to spend more than $100bn on transport programmes and provisions that extend the existing help for flood risk homebuyers.

It cleared the House in a 373-52 vote. The Senate later approved the bill by a 74-19 margin. It will now go to the White House to be signed off by the president.

The package will prevent federal loan interest rates for students doubling to 6.8% on Sunday in a one-year, $6bn deal.

Alongside shielding millions of students from further belt-tightening, the measures are expected to protect some 2.8m jobs in regard to transportation programmes.
29th June 2011