The 3.4 percent rate is a result of the College Cost Reduction and Access Act passed by Congress in 2007. That law reduced the rate yearly – from 6.8 percent in 2007-08 to 6 percent, then 5.6 percent, 4.5 percent, and finally 3.4 percent in 2011-12. The law also set the rate to return to 6.8 percent in 2012-13.
Democrats who came into power in 2007 “had campaigned on a promise to cut interest rates in half on student loans. That proved to be a very, very expensive promise,” Delisle says. “So they put in a lot of fine print to limit who gets [the lower rate] and when.”
