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Congress approves lower interest rate for college students

Posted at 12:13 AM, Aug 02, 2013
and last updated 2013-08-02 00:13:46-04

RICHMOND, Va (WTVR) - Like many college students, Tiffany Spearman doesn't want to think about paying off her student loans.

"Imagine getting out of college and you work so hard and then all of a sudden, you have to pay it back," she said.

Student loans most likely won't ever disappear, but on Wednesday, Congress approved a bipartisan bill that would guarantee lower interest rates for students who are going to college in the fall.

"Several points lower in interest is very necessary, it's very helpful to them," said Luke Schultheis, Vice Provosts of Strategic Enrollment Management at VCU.

The bill would lower the interest rates for undergraduates to a fixed 3.86% rather than the 6.8% interest rate that took affect on July 1.

Schultheis said the interest rate for  new borrowers each year could rise as the economy strengthens but says there are caps on the rates. An undergrad will save $300 on every $10,000 owed but Schultheis said it's difficult to give an exact number since it changes for everyone.

"A student at an institution for four years will incur significantly less debt than one who's in an institution for five or six years," he said.

The new interest rate only affects Stafford loans, not any loans from private lenders.

The bill will now go to President Obama to be signed into law.