WASHINGTON, D.C. | May 16, 2013 -
Today the committee will consider a pair of higher education bills designed to tackle two significant problems facing students.
The first piece of legislation before us today is H.R. 1949, the Improving Postsecondary Education Data for Students Act. Introduced by Rep. Luke Messer of Indiana’s 6th District, this legislation will inform the committee’s efforts to reauthorize the Higher Education Actand enhance transparency for students and families.
Information is crucial to help families understand their higher education options as well as the financial investment that comes with earning a postsecondary degree. In recent years Republicans have championed efforts to make clear, consistent information available to students about price, financial aid, demographics, and graduation rates.
However, during an April Subcommittee on Higher Education and Workforce Training hearing chaired by Rep. Virginia Foxx, we learned federal efforts to improve data collection and transparency aren’t working as well as we’d hoped. Many students still have difficulty accessing and understanding the resources they need to choose the right college.
As Michigan State University Dean of the College of Education Dr. Donald Heller explained in his testimony, “The internet has greatly helped to democratize access to information. What it has not done as successfully…[is] help people get access to the right information to meet their needs. And it is critical that we help prospective students to get the right information in their hands at the necessary times.”
By directing the Secretary of Education to examine opportunities to enhance higher education transparency, the Improving Postsecondary Education Data for Students Act will help us better understand the kind of information students have, want, and need when researching their higher education options.
This legislation takes an important step toward strengthening higher education transparency, eliminating unnecessary reporting requirements, and ensuring students have the resources necessary to choose the right college. I urge my colleagues to support H.R. 1949.
The second bill before the committee today is H.R. 1911, the Smarter Solutions for Students Act. Rep. Foxx and I recently introduced this responsible proposal to address the looming student loan interest rate cliff.
As we are all well aware, subsidized Stafford loan interest rates are scheduled to double from 3.4 percent to 6.8 percent in a few short weeks. Last year Congress took action to extend the lower rate for one year. I agreed to support the bill with the promise we would use this time to advance a long-term solution that gets politicians out of the business of setting student loan interest rates.
The Smarter Solutions for Students Act accomplishes this goal by simply moving all federal student loans – except Perkins loans – to a market-based interest rate system. This is similar to a proposal put forth in President Obama’s Fiscal Year 2014 budget request.
Under H.R. 1911, subsidized and unsubsidized Stafford loan interest rates will be calculated based on the 10-year Treasury note plus 2.5 percent. We expect the legislation will drop Stafford loan interest rates to about 4.4 percent. Parent and graduate PLUS loan interest rates will be calculated using the 10-year Treasury note plus 4.5 percent, bringing these rates down to approximately 6.4 percent.
By tying interest rates back to the free market, the Smarter Solutions for Students Act ensures all borrowers can take advantage of lower interest rates when available. H.R. 1911 also protects borrowers against higher interest rates by imposing a reasonable cap of 8.5 percent on Stafford loan interest rates and 10.5 percent on PLUS loan interest rates.
Additionally, the legislation maintains students’ ability to consolidate their loans upon graduation and lock in a fixed interest rate for the life of the loan. And students can still take advantage of existing federal repayment and debt management initiatives, such as the income-based repayment programs, numerous loan forgiveness programs, and opportunities for deferment or forbearance.
We all recognize the urgent need to take action. No one wants to see student loan interest rates double on July 1st. The president put forth a plan in his budget to address the problem with a market-based solution, and my Republican colleagues and I worked in good faith to offer a proposal that largely mirrors the president’s. Despite claims to the contrary, we tried our best to make this proposal budget neutral to protect both taxpayers and borrowers. And we will continue to consider ideas to improve the proposal through the open legislative process.
We have an opportunity for bipartisan compromise on this matter – something that is exceedingly rare in Washington. The Smarter Solutions for Students Act is a responsible, long-term proposal that will strengthen federal student loan programs and provide more stability for taxpayers and students in the long run. I strongly encourage my colleagues on both sides of the aisle to lend their support.
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