A bill that will reduce the costs of borrowing for millions of college students passed the U.S. House on Wednesday, a month after congressional gridlock doubled the interest rates on student loans.
This fall, undergraduate students will borrow at 3.9 percent, a slightly higher rate than the 3.4 percent rates they had access just a few weeks ago. Graduates would borrow at 5.4 percent and parents would have access to loans at 6.4 percent. Under the legislative approved Wednesday, rates would be locked in for that year's loan.
After easily passing the House 392 to 31, the legislation is now headed to President Obama, who has already voiced support.
Republican Rep. John Kline, the chairman of the House Educaiton and the Workforce Committee celebrated the vote as a win for Republicans. The GOP has worked for years to link student loan rates to the markets
"I applaud my colleauges on the other side of the aisle for finally recognizing this long-term, market-based proposal for what it is: a win for students and taxpayers," Kline said.
Democratic U.S. Rep. Keith Ellison was the lone member of Minnesota's delegation to vote against the legislation, which ties student loan interest rates to financial markets. Rates will rise if the economy improves, making it more expensive for the federal government to borrow money.
"I voted against the bill because it increases the cost of higher education for future students -- at a time when college tuition continues to rise and the vast majority of families are struggling with stagnant incomes. The 'fix' in the plan means interest rates on student loans could reach 8.5 percent in the next five years, much higher than the current rates," Ellison said in a statement.
Wednesday's vote was the result of a Senate compromise, after members in the upper chamber failed to reach a decision before the July 1 expiration of the reduced rates.
Democrats such as Ellison, Rep. Tim Walz and California Rep. George Miller, the lead Democrat on the House Education Comittee, said the legislation will need tweaking as rates rise, making it more difficult for student to pay off loans.
"This bill helps reduce costs to students and families, but it does not solve the long-term student loan debt crisis," Miller said.