Barack Obama Signs Off on Student Loan Deal

President Barack Obama has signed into law a bill that will restore lower interest rates on loans for millions of students who are heading back to college this fall.The new law links student loan interest rates to the financial markets and will restore lower rates this fall.

About 11 million college students will benefit from the legislation, which brings interest rates near what they were before a temporary extension expired in June.Undergraduate students will now be able to borrow at a 3.9 percent rate for subsidized and unsubsidized loans, according to the legislation negotiated in July.The previous rate for undergraduate borrowers was 3.4 percent.

Graduate students will be able to borrow at 5.4 percent and parents will be able to borrow at 6.4 percent.

Because the rates are tied to the financial market, they're expected to edge higher. The lower interest rates are in place because the government can borrow more cheaply now, but once the economy improves, borrowers can expect to see rates rise.

There is still a cap for borrowers -- interest rates for undergraduates cannot go above 8.25 percent.

Student debt is still a massive issue in the U.S., where there is between $902 billion and $1 trillion in student debt, according to Federal Reserve Bank of New York and Consumer Finance Protection Bureau estimates.