U.S. Sen. Kay Hagan on Tuesday said she'll vote for a bill in the Senate that will make student interest rates float with the market.
The market-based plan would make all undergraduate loans 3.86 percent for the next school year, including those taken out since July 1.
Hagan's support comes after a provision was added to cap interest rates on all loans. Hagan said the caps were a priority for her.
The Greensboro Democrat was an original co-sponsor, with Sen. Jack Reed, D-R.I., of an alternative bill that would have extended the 3.4 percent rate on subsidized loans for another year. Unsubsidized loans are 6.8 percent under current law, and many students need to take out both types. The Reed-Hagan bill would have left rates on some undergraduate and all graduate rates at 6.8 percent.
But the Reed and Hagan bill went down to defeat in the Senate earlier this month.
U.S. Sen. Richard Burr of Winston-Salem was one of the leading Republican senators who negotiated the market-based plan. Hagan was not among the negotiators.
Hagan says she supports the bill because it will give students a chance to take advantage of low interest rates over the next few years. The proposal caps undergraduate rates at 8.25 percent.
Hagan said the Congressional Research Service figured that the legislation would save the average student borrower $2,000 over the next four years.
A vote is expected in the Senate this week. If the measure becomes law, rates will be set once a year just before June based on the government's 10-year Treasury note plus a markup to cover the government's costs of the loan program. Rates would be capped on undergrad loans at 8.25 percent.
"I'm committed to working toward greater college affordability," Hagan told reporters on a conference call Tuesday morning."
Hagan said she hoped Republicans and Democrats could come to agreement on ways to keep student loan rates low when the economy improves and "other ways to make college more affordable and accessible to more students."
She said possibilities include a national drive toward copying North Carolina's Early College program and expansion of Advanced Placement and International Baccalaureate classes, which also can help students get college credits in high school.
— Renee Schoof, Washington Bureau