WASHINGTON, D.C. – In remarks delivered on the Senate floor this afternoon, U.S. Senator Angus King (I-Maine) applauded an announcement that federal student loan interest rates for the 2016-2017 academic year will fall to 3.76 percent, down from last year’s rate of 4.29 percent – the best rate for students in twelve years. The reduction is the result of the Bipartisan Student Loan Certainty Act, legislation brokered by Senator King and a bipartisan group of his colleagues in 2013 that pegged interest rates to the financial markets rather than having Congress set them, which had been the prior practice. The legislation is projected to now save millions of students more than $50 billion in interest payments, including $277 million for students at Maine colleges and universities, according to the New America Foundation.

            “I think every now and then it’s important to acknowledge that policies work out, and this is one that has worked out spectacularly for the students of America,” Senator King said in his remarks. “$50 billion over the next ten years will be saved by students who would otherwise be paying that money in interest, and that’s money that they can invest in their own futures and can make a better life for themselves, their families, and our country.”

The U.S. Treasury Department announced today that interest rates on federal student loans have fallen for the second consecutive year to the lowest rate in twelve years. According to the Treasury Department, undergraduate loans issued after July 1, 2016 will now be set at 3.76 percent, down from 4.29 percent. Last year student loan rates also dropped, from 4.66 percent to 4.29 percent. With today’s rate reduction, students and their families across the country are set to save another $14 billion.

The Bipartisan Student Loan Certainty Act was crafted in 2013 by Senator King and a bipartisan group of his colleagues following a stalemate in Congress that risked skyrocketing rates to 6.8 percent. Senator King partnered with Senators Joe Manchin (D-W.Va.), Tom Carper (D-Del.), Richard Burr (R-N.C.), Tom Coburn (R-Okla.), Lamar Alexander (R-Tenn.), Dick Durbin (D-Ill.), and Tom Harkin (D-Iowa) to craft the Bipartisan Student Loan Certainty Act. The legislation required that, for each academic year, all newly-issued student loans be set to the U.S. Treasury 10-year borrowing rate plus add-ons to offset costs associated with defaults, collections, deferments, forgiveness, and delinquency. The bill passed both the U.S. Senate and the U.S. House of Representatives overwhelmingly and was signed into law by the President.

In his remarks, Senator King also said that there is work left to be done to make higher education more accessible and affordable for more students:

            “Now I’m delighted that we’ve had this success and that we’ve been able to report something that has actually been done right around here and that has truly benefited millions of students across this country. But we still have plenty of work to do,” Senator King continued. “College is still too expensive. The burden of student debt, generally, is very heavy and weighs on not only the students, but our economy. We need to reauthorize the Higher Education Act, and we need to enact meaningful changes in the whole structure of how colleges can keep their prices affordable so that we can give students the tools they need to succeed. We also need to look at the structure of student loan programs to simplify: A) how you apply, and B) how you pay them back … so that students don’t exit college with this enormous burden.”

To that end, Senator King has partnered with Senator Burr to introduce the Repay Act, legislation that aims to simplify the complex maze of federal student loan repayment programs by consolidating many of the benefits of current repayment programs into two plans: a fixed repayment plan, based on a 10-year period, and a single, simplified income-driven repayment option. The Repay Act received a unanimous vote of 97-0 in the Senate last spring.

He has also joined with Senator Lamar Alexander to introduce the FAST Act, bipartisan legislation that would simplify the process of applying for and receiving federal financial aid to attend college, allow the year-round use of Pell Grants, discourage over-borrowing, and simplify student loan repayments.

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