Update: Congress passes Bipartisan Student Loan Certainty Act of 2013

In a fairly novel turnaround Congress passed a major piece of legislation Wednesday with significant bipartisan support that changes the way interest rates for student loans will be calculated. The┬áBipartisan Student Loan Certainty Act of 2013 was able to bridge a gap between Democrats and Republicans over the government’s role in regulating financial institutions. The bill passed by an overwhelming majority of 392 to 31.

The fate of the bill has long been in question as both Democrats and Republicans alike tried to find reasons for opposing it, ranging from concerns about protecting students from predatory loan practices among the former to worries about government interference in distorting interest rates.

All federally subsidized Stafford loans will have interest rates that are tied to 10-Year Treasury bonds plus 1.8 percent with a cap of 8.5 percent and 9.5 percent on undergraduate and graduate loan respectively. The federal loan program PLUS would pay the Treasury rate plus 4.5 percent. Roughly, this means individuals taking out new loans after the law passes will pay 3.61 percent for undergraduate loans and 5.21 percent for graduate loans.