A bipartisan group of Senators has reached an agreement that would cut the interest rate for 9 million undergraduates this year from 6.8% to 3.86%. Under the "Bipartisan Student Loan Certainty Act,” the interest rate for Direct Subsidized and Unsubsidized Stafford loans to undergraduate students disbursed during any 12-month period beginning on July 1 shall be fixed at the rate to the high yield of the 10-year Treasury note auctioned at the final auction prior to the preceding June 1 plus 2.05%, capped at 8.25%; the interest rate for Unsubsidized Stafford loans to graduate or professional students disbursed during any 12-month period beginning on July 1 shall be fixed at the rate to the high yield of the 10-year Treasury note auctioned at the final auction prior to the preceding June 1 plus 3.6%, capped at 9.5%; and the interest rate for Direct PLUS loans (including GradPLUS) disbursed during any 12-month period beginning on July 1 shall be fixed at the rate to the high yield of the 10-year Treasury note auctioned at the final auction prior to the preceding June 1 plus 4.6, capped at 10.5%. Direct Consolidation loans shall bear interest at the weighted average of the interest rate of loans consolidated, rounded up to the nearest one-eighth of one percent.

These rates would apply retroactively to students who were impacted by the rate increase on July 1. The new rates are expected to produce an estimated savings of $715 million to go toward deficit reduction. In addition, the legislation calls for the GAO to undertake a complete study of the actual cost to the Federal Government of carrying out the Federal student loan programs authorized under Title IV of the HEA.