Sec. 3. Interest rates
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Section 455(b) of the Higher Education Act of 1965 ( 20 U.S.C. 1087e(b) ) is amended— by redesignating paragraph
(9)as paragraph (10); and by inserting after paragraph
(8)the following: Notwithstanding the preceding paragraphs of this subsection, for Federal Direct Stafford Loans and Federal Direct Unsubsidized Stafford Loans issued to undergraduate students, for which the first disbursement is made on or after July 1, 2018, the applicable rate of interest shall, for loans disbursed during any 12-month period beginning on July 1 and ending on June 30, be determined on the preceding June 1 and be equal to the lesser of— a rate equal to— the high yield of the 10-year Treasury note auctioned at the final auction held prior to such June 1, plus .5 percent; or 8.25 percent. Notwithstanding the preceding paragraphs of this subsection, for Federal Direct Unsubsidized Stafford Loans issued to graduate or professional students, for which the first disbursement is made on or after July 1, 2018, the applicable rate of interest shall, for loans disbursed during any 12-month period beginning on July 1 and ending on June 30, be determined on the preceding June 1 and be equal to the lesser of— a rate equal to— the high yield of the 10-year Treasury note auctioned at the final auction held prior to such June 1, plus .5 percent; or 9.5 percent. Notwithstanding the preceding paragraphs of this subsection, for Federal Direct PLUS Loans, for which the first disbursement is made on or after July 1, 2018, the applicable rate of interest shall, for loans disbursed during any 12-month period beginning on July 1 and ending on June 30, be determined on the preceding June 1 and be equal to the lesser of— a rate equal to— the high yield of the 10-year Treasury note auctioned at the final auction held prior to such June 1, plus .5 percent; or 10.5 percent. Notwithstanding the preceding paragraphs of this subsection, any Federal Direct Consolidation Loan for which the application is received on or after July 1, 2018, shall bear interest at an annual rate on the unpaid principal balance of the loan that is equal to the weighted average of the interest rates on the loans consolidated, rounded to the nearest higher one-eighth of one percent. The Secretary shall determine the applicable rate of interest under this paragraph after consultation with the Secretary of the Treasury and shall publish such rate in the Federal Register as soon as practicable after the date of determination. The applicable rate of interest determined under this paragraph for a Federal Direct Stafford Loan, a Federal Direct Unsubsidized Stafford Loan, or a Federal Direct PLUS Loan shall be fixed for the period of the loan. . Section 455(f) of the Higher Education Act of 1965 ( 20 U.S.C. 1087e(f) ) is amended— in paragraph (1), in the matter preceding subparagraph (A), by striking A borrower and inserting Except as provided in paragraph (5), a borrower ; and by adding at the end the following new paragraph: Notwithstanding any other provision of this Act, a borrower described in paragraph (2)(A) shall be eligible for a deferment, during which periodic installments of principal need not be paid, and interest— shall not accrue, in the case of a borrower with an expected family contribution of not more than $10,000 (computed in accordance with part F of this title); and shall accrue at the rate equal to the high yield of the 10-year Treasury note applicable to such loan under subsection (b)(9), in the case of a borrower of an unsubsidized loan with an expected family contribution of more than $10,000 (computed in accordance with part F of this title). . The amendments made by subsections
(a)and
(b)shall take effect as if enacted on July 1, 2018.
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