The U.S. Senate this week approved a plan to restructure federal student loans by tethering interest rates to the market and limiting how high those rates can climb. The legislation calls for interest rates set according to the value of the 10-year Treasury bill, plus a percentage add-on. Rates would be locked in for the life of the loan. The lowest interest would be enjoyed by undergraduates, capped at 8.25 percent. The rate for graduate students could go up to 9.5 percent; and PLUS loans to graduate students and parents of students would bear the highest interest, with a ceiling of 10.5 percent. For the coming year, undergraduates would pay 3.86 percent interest, with graduate students at 5.41 and PLUS loans at 6.41 percent. All of those rates are lower than the current levels. An improved economy is expected to raise those rates, however, and even surpass current rates within five years. "My colleagues who support this proposal say that it will lower interest rates on loans for this year -- and that's all that matters," remarked Sen. Elizabeth Warren (D-Mass.) "Now, that's the same thing credit card companies said when they sold zero-interest credit cards, and it's the same thing subprime mortgage lenders said when they sold teaser-rate mortgages. In all of these cases, the bill comes due." Several senators also noted that the plan does not address the existing $1 trillion in student loan debt or the billions of dollars in profit that the U.S. government earns from student loans.