Education and Labor Committee RSS Articles

House Approves Long-Term Solution to Student Loan Interest Rates

Thu, 23 May 2013 16:15:00 GMT

The U.S. House of Representatives today approved the Smarter Solutions for Students Act (H.R. 1911), legislation that will prevent subsidized Stafford loans from doubling on July 1st. Introduced by Education and the Workforce Committee Chairman John Kline (R-MN) and Higher Education and Workforce Training Subcommittee Chairwoman Virginia Foxx (R-NC), H.R. 1911 reflects President Obama’s request for a long-term, market-based solution to the student loan issue.

"Today the House has taken action to prevent interest rates from doubling on millions of student loan borrowers," said Chairman Kline. "President Obama asked for a long-term, market-based solution and that is precisely what we have delivered. It is now up to the Senate to move forward with its own ideas to solve the problem, so we can come together and send a bill to the president. The American people sent us here to tackle tough issues, not kick the can down the road. The time to act is now. Students, families, and taxpayers cannot afford further delay."

"Campaign promises and political posturing should not play a role in the calculation of student loan interest rates," said Rep. Foxx. "As we’ve seen, Washington’s involvement in the rate-setting equation is a recipe for uncertainty and confusion. Borrowers deserve better. The Smarter Solution for Students Act puts an end to the temporary fixes that have failed to strengthen our nation’s student loan system and offers simplicity, rate caps and an assurance that interest rates are immediately in line with the free market – a need particularly acute in this jobless economy. If President Obama and Senate Democrats are serious about a long-term solution to the student loan interest rate problem, they will immediately consider and build on the ideas put forth in the Smarter Solutions for Students Act ."

The House also recently approved the Improving Postsecondary Education Data for Students Act (H.R. 1949). Sponsored by Rep. Luke Messer (R-IN), the legislation will help enhance transparency in higher education.

"Few decisions in life are bigger than whether to attend college and which college to attend," said Rep. Messer. "Yet many families find it a challenge to wade through the complicated maze of statistics available for this important decision. Through this bill, we hope to simplify the process and help students get access to the information they really need to make good decisions while lessening the burden on colleges and universities that have far too many reporting requirements today."

"I want to thank Representative Messer for his leadership on the legislation," said Chairman Kline. "In the coming months, the committee will continue the important task of reauthorizing the Higher Education Act. Information is critical as families and students plan for college. We have to find better ways to give them the information they need without burying schools in paperwork. This legislation will help strengthen that effort and I look forward to working with all my colleagues on this issue."

To learn more about H.R. 1911, visit edworkforce.house.gov/smartersolutions

To learn more about H.R. 1949, visit edworkforce.house.gov/betterdata

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VIDEO RELEASE: Kline Encourages Colleagues to Vote 'Yes' on Legislation to Prevent Student Loan Interest Rate Cliff

Thu, 23 May 2013 16:00:00 GMT

The House is currently considering the Smarter Solutions for Students Act (H.R. 1911), legislation that will move all federal student loans (except Perkins Loans) to a market-based rate.

Moments ago, House Education and Workforce Committee Chairman John Kline (R-MN) urged his colleagues to support this responsible proposal:

We have an opportunity today to get politicians out of the business of setting student loan interest rates. We have an opportunity to provide students more stability in the long run by putting an end to quick fixes and campaign promises. And we have an opportunity to build upon common ground with the administration and advance a bipartisan solution that’s a win for both students and taxpayers.

Similar to a plan put forth in President Obama’s Fiscal Year 2014 budget request, H.R. 1911 would set federal student loan interest rates using a formula based on the 10-year Treasury note. Not only will the bill prevent student loan interest rates from doubling on July 1, 2013, the Smarter Solutions for Students Act will also provide certainty for millions of borrowers by tying interest rates to the free market rather than the political whims of Washington.

To learn more about the Smarter Solutions for Students Act, click here edworkforce.house.gov/SmarterSolutions.

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VIDEO RELEASE: Rep. Luke Messer Urges Support for Legislation to Enhance Higher Education Transparency

Thu, 23 May 2013 13:30:00 GMT

The U.S. House of Representatives recently approved the Improving Postsecondary Education Data for Students Act (H.R. 1949). Sponsored by Rep. Luke Messer (R-IN), the legislation will help strengthen higher education transparency and ensure students and families have access to the data they need to choose the right college.

During debate on the House floor, Rep. Messer highlighted the need to improve higher education data and explained how H.R. 1949 will help guide the committee’s efforts to provide students with the most relevant information:

Few decisions in life are bigger than whether to attend college and which college to attend. Yet many families struggle to wade through the complicated maze of statistics to find the information they need to make fully informed, cost-conscious decisions...Through the Improving Postsecondary Education Data for Students Act, we hope to simplify the process and help ensure students can access the information they need to make good decisions while lessening the burden on colleges and universities that have far too many reporting requirements today.

To learn more about the Improving Postsecondary Education Data for Students Act, visit edworkforce.house.gov/BetterData.

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Kline and Foxx: Getting politics out of student loans

Thu, 23 May 2013 13:00:00 GMT

Bipartisan compromise is tough to find in Washington right now — but when there is opportunity for agreement, we owe it to the American people to take action.

In the coming weeks, millions of student-loan borrowers could see their interest rates double from 3.4 percent to 6.8 percent. We’re in this predicament because politicians put themselves in charge of setting interest rates, guaranteeing uncertainty for students and more infighting in Congress.

Students deserve a long-term solution that gets Washington out of the business of setting student-loan interest rates. Fortunately, President Obama agrees. In his budget for the next fiscal year, the president offered a plan to tie rates to the free market.

Heartened by the president’s proposal, Republicans put together a similar measure, the Smarter Solutions for Students Act, which the House will consider on Thursday. Just like the president’s plan, our legislation will apply a market-based interest rate to all federal Stafford and PLUS loans, ensuring borrowers will be able to take advantage of today’s low rates.

By tying rates to the market, the Smarter Solutions for Students Act sets a predictable formula for interest-rate calculations, insulated from the politics and posturing of Washington. Additionally, we protect students from high interest-rate environments by imposing a fair and reasonable cap.

Here’s why we’re shifting away from fixed rates. First, fixed rates function problematically as both a floor and ceiling for borrowers. They sound like a great plan until lower rates become available in the market — something we’re seeing today.

Second, administering federal student-loan programs comes with a cost. We readily acknowledge politicians don’t have the know-how to pick static interest rates that will work for borrowers and fund student-loan programs without leaving taxpayers on the hook for students’ low interest rates.

The Smarter Solutions for Students Act is the product of numerous hearings and discussions with higher-education experts. It’s been written in good faith. Despite our best efforts, however, this responsible legislation has already come under fire from some congressional Democrats. These defenders of the status quo are angry that the Smarter Solutions for Students Act will allow interest rates to fluctuate with the market, and claim a better plan is to simply extend current rates for another year or two at a cost of roughly $8 billion. We respect their views, but their plan just passes the buck, once again.

Students deserve better. They shouldn’t have to watch Congress hold their interest rates hostage, or see them used as bargaining chips each election year. They shouldn’t have to deal with the uncertainty that comes with waiting for Congress to cobble together another temporary fix to keep interest rates in line with the market.

That’s what the Smarter Solutions for Students Act is all about. It will put an end to the quick fixes and campaign promises that have failed to strengthen our nation’s student-loan system. Our proposal offers predictability, simplicity and the flexibility to take advantage of low interest rates whenever possible. In fact, should this legislation be enacted this summer, most student-loan borrowers will see their interest rates drop as much as 2 percentage points. It’s a win for students, and a win for taxpayers.

There is growing consensus in Washington that tying rates back to the free market is the right way forward. Instead of finding excuses to politicize the issue, this should be an opportunity to build on common ground as we look to address the big challenges facing the nation’s education system. We hope the administration and our colleagues in the House and Senate will stand by the president’s proposal and help us move the Smarter Solutions for Students Act swiftly through Congress and onto his desk.

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Kline Statement: H.R. 1911, The Smarter Solutions for Students Act

Thu, 23 May 2013 04:00:00 GMT

We’re here today to address a crisis of Washington’s own making. Several years ago, Congress decided politicians – not the free market – were better equipped to set student loan interest rates. Politicians set a fixed rate of 6.8 percent for all loans, and then decided to advance legislation based on a campaign promise that would temporarily phase this rate for subsidized Stafford loans down to 3.4 percent.

Last summer, with the expiration of the lower rate scheduled for July 1, 2012, debate about student loans reached a fever pitch. The president began touring college campuses, calling on Congress to prevent the increase that his own party set in motion back in 2007.

As I said at the time, no one wanted to see interest rates double – particularly at a time when 1 out of every 2 college graduates was struggling to find a full time job. But we need to move away from a system that allows Washington politicians to use student loan interest rates as bargaining chips, creating uncertainty and confusion for borrowers.

When Congress approved legislation to temporarily stave off the Stafford Loan interest rate increase, my colleagues and I lent our support with the promise that we would use this time to work toward a long-term solution that better aligns interest rates with the free market.

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 responsible legislation builds upon a proposal put forth by President Obama earlier this year.

The Smarter Solutions for Students Act is a narrow piece of legislation that will provide a lasting solution to the problem facing the federal student loan program. Unfortunately, some critics would rather kick the can down the road and simply extend the current arbitrary rates at a taxpayer cost of roughly $8 billion dollars. They want to continue the failed status quo and leave politicians in charge of setting rates.

Earlier this week, the Washington Post called it a “weird fact” that student loan interest rates “aren’t pegged to anything real, just to the whims of Congress, which inevitably uses student loans as political playthings.” Students deserve better. They shouldn’t have to watch as Washington holds their interest rates hostage each election year. They shouldn’t have to deal with the uncertainty that comes with waiting for politicians to cobble together another temporary fix to keep interest rates in line with the market.

I urge my colleagues to support the Smarter Solutions for Students Act and reserve the balance of my time.

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THEN vs. NOW: Education Secretary Flip-Flops on Support for Long-Term Student Loan Solution

Wed, 22 May 2013 22:00:00 GMT

Once again Washington is working to prevent subsidized Stafford Loan interest rates from doubling. The House is expected to vote tomorrow on the Smarter Solutions for Student Act, legislation that provides a permanent solution on behalf of students and taxpayers.

Just yesterday Education Secretary Arne Duncan assured Congress that the Obama administration wants a long-term solution. However, a new statement from the department calls into question the veracity of the secretary’s testimony:

THEN: “The fact that we can’t think long-term, the fact that we can’t take a tough issue, deal with it, move it off the table, and move onto other issues I just don’t understand that thinking. So we are interested in a long-term fix, we are interested in it being budget-neutral and look forward to continue conversations with you and others to find some common ground.” (Testimony before the House Education and the Workforce Committee, 05/21/13)

NOW: “Given the impending July 1 deadline, an extension that protects students against higher rates while Congress develops an alternative solution is another reasonable option.” ("Statement from Secretary Duncan on Preventing Student Loan Interest Rates from Doubling on July 1," 05/22/13)

Remarkably, it appears Secretary Duncan was also being less than candid when he suggested a willingness to work together to “find some common ground.” Earlier today the White House threatened to veto the only plan that meets the president’s goal for a market-based, long-term solution.

As Chairman Kline said in response to this disappointing veto threat: “Today’s announcement proves the president would rather pick a partisan fight with Congress instead of work in good faith on a bipartisan solution.”

The American people deserve to know: Does the president support a long-term solution or not? And when will the Obama administration engage Congress in a serious discussion to address an important issue facing our families and students?

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Kline Responds to Administration’s Statement on House Republican Student Loan Bill

Wed, 22 May 2013 21:00:00 GMT

House Committee on Education and the Workforce Chairman John Kline (R-MN) today released the following statement after the Obama administration threatened to veto H.R. 1911, the Smarter Solutions for Students Act:

I’m disappointed the administration has threatened to veto the Smarter Solutions for Students Act. The legislation is based on the president’s own proposal, and provides a solid basis for negotiation through the legislative process.

The administration wanted a long-term solution that put the market – not Congress – in charge of setting student loan interest rates, and that’s exactly what the Smarter Solutions for Students Act will do.

The administration wanted to prevent student loan interest rates from doubling in July, and H.R. 1911 accomplishes that goal as well. In fact, most borrowers will see their interest rates drop by as much as 2 percent if this bill is enacted this summer.

The administration wanted to protect students against higher interest rates. The Smarter Solutions For Students Act includes a reasonable cap to keep interest rates from climbing too high and allows students to consolidate their loans into a low fixed rate upon graduation.

Finally, the administration wanted a proposal that was budget neutral, and H.R. 1911 generates roughly the same 10 year savings as President Obama’s own plan.

Today’s announcement proves the president would rather pick a partisan fight with Congress instead of work in good faith on a bipartisan solution. The president’s unfortunate position does not alter our intent to advance the bill through the legislative process or our resolve to develop a long-term solution that both the House and the president can support.

At a hearing in the Education and the Workforce Committee, Secretary Duncan offered his support for a long-term solution to address the student loan interest rate problem. His remarks can be viewed here.

The Smarter Solutions for Students Act (H.R. 1911) would take politicians out of the business of calculating student loan interest rates by moving all federal student loans (except Perkins Loans) to a new interest rate formula based on the 10-year Treasury Note, similar to a proposal put forth in President Obama’s Fiscal Year 2014 budget plan. To learn more about H.R. 1911, visit edworkforce.house.gov/SmarterSolutions.

Walberg Statement: Hearing on "Examining the Regulatory and Enforcement Actions of the Equal Employment Opportunity Commission"

Wed, 22 May 2013 14:00:00 GMT

Chair Berrien we are pleased to see you today. It has been a long time since the committee convened a hearing to examine the policies and priorities of the Equal Employment Opportunity Commission. We are grateful you’ve joined us and thank you for your service to our country.

Republicans and Democrats share the same goal: We want to ensure the American people work in an environment free of discrimination. Whether or not an individual succeeds in a workplace should be determined by merit and hard work, not the unlawful prejudice of their boss. For most employers, a person’s skills and drive to succeed are what matter most. However, bad actors will put personal bigotries before the talent and dedication of America’s workers.

A recent case out of Davenport, Iowa provides a stunning example of this difficult reality. According to reports, 32 men with intellectual disabilities were subjected to abuse and discrimination. The deplorable treatment these men faced included verbal and physical harassment, substandard living conditions, and inadequate medical care. EEOC is to be applauded for helping to bring those who committed these heinous acts to justice.

Federal laws prohibiting employment discrimination should be vigorously and fairly enforced. That’s why we are here today. There has been a significant shift in both the enforcement and regulatory priorities at EEOC in recent years. It is our responsibility to ask tough questions to ensure agency policies are in the best interests of workers and employers.

For example, does it serve the best interests of workers and employers when EEOC investigates businesses without evidence of wrongdoing? The agency has set a goal that up to 24 percent of all litigated cases be systemic in nature. At times, these investigations are launched without any employee alleging discrimination. Meanwhile, a backlog of more than 70,000 discrimination claims by workers continues to plague the commission.

At a time of high unemployment and record federal debt, every job and dollar counts. We should not be diverting scarce resources away from workers who believe they’ve been harmed in order to follow a hunch. And we should not be dragging our nation’s job creators through unnecessary and costly investigations without a factual basis of wrongdoing.

Does it also serve the best interest of workers and employers when the full weight of the agency’s litigation power is ceded to one individual? Congress created a commission of five members to ensure accountability within the agency. Yet for almost 20 years the commission has delegated that authority to the Office of General Counsel. Under only limited circumstances can the commission vote on the general counsel’s decision to intervene in litigation and these narrow exceptions are not always clear.

As a result, the general counsel has almost complete control over EEOC’s enforcement agenda. This cannot be what Congress intended and it’s having a real impact on the lives of workers. One case initiated by the general counsel was later rejected by a federal district judge. The judge described the commission’s actions as a “sue first, ask questions later litigation strategy” and noted that “dozens of potentially meritorious sexual harassment claims may now never see the inside of a courtroom.”

Finally, is it in the best interests of workers and employers when the commission pursues regulatory policies that may make workplaces less safe? In April 2012, EEOC revised its long-standing guidance on the use of criminal background checks. Should the background check reveal a criminal offense, employers will have to conduct an “individual assessment” and identify a “business necessity” that merits denying the individual employment.

However, this proposal has already been criticized by one federal court. As one federal judge noted almost 25 years ago, “Obviously a rule refusing honest employment to convicted applicants is going to have an disparate impact upon thieves.”

This policy also puts many employers at risk of running afoul of state or local laws that require background checks for certain positions of public trust, such as child care providers. Employers will bear the burden of any unintended consequences stemming from this regulatory change, not EEOC.

Yet they and the public were denied an opportunity to comment on the proposal before it became final. Public meetings on broader topics isn’t the level of openness and transparency the American people deserve. Shouldn’t workers and employers have an opportunity to comment on policy changes that affect their workplaces?

Chair Berrien, these are serious questions that I hope we can discuss with you today. I know that is a lot to address in one hearing. However, we hope this hearing starts a new, more open dialogue between the committee and EEOC. As I noted earlier, we all share the same goal and only when we work together can we move closer toward that goal. Thank you again for being with us today.

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Secretary Duncan Joins House Republicans in Support for Long-Term Solution to Student Loan Interest Rates

Tue, 21 May 2013 20:30:00 GMT

The House Committee on Education and the Workforce, chaired by Rep. John Kline (R-MN), today held a hearing with Education Secretary Arne Duncan to examine the administration’s budget and policy proposals. During the hearing, members spoke with Secretary Duncan about the need to address the upcoming student loan interest rate cliff with a lasting solution that will better serve students and taxpayers.

“The committee recently approved with bipartisan support the Smarter Solutions for Students Act,” said Chairman Kline, “legislation that mirrors the president’s proposal to tie student loan interest rates to the 10-year Treasury note… I hope the administration will work with us to move this bill quickly through the legislative process and into the president’s hands before the interest rate cliff hits millions of students on July 1st.”

In an exchange with Chairman Kline, Secretary Duncan affirmed his support for enacting a long-term solution to the student loan interest rate issue “sooner rather than later”:

We have to start taking on tough issues, we have to take them on in a bipartisan way and we have to think for the long haul… The fact that we can’t think long-term, the fact that we can’t take a tough issue deal with it, move it off the table move onto other issues, I just don’t understand that thinking. So we are interested in a long-term fix, we are interested in it being budget-neutral and look forward to continue conversations with you and others to find some common ground.

The Smarter Solutions for Students Act (H.R. 1911) will be up for consideration by the U.S. House of Representatives later this week. To learn more about the legislation, visit edworkforce.house.gov/SmarterSolutions.

To read witness testimony, opening statements, or watch an archived webcast of today’s hearing, visit www.edworkforce.house.gov/hearings.

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ICYMI: Reforming student loans is off to a good start

Tue, 21 May 2013 14:30:00 GMT

Congress has only begun working on student loans this year, and already it’s going better than last year’s debacle.

Election-year politics drove Congress and the White House to endorse a bumper-sticker policy — keep loan rates from doubling! — instead of looking at the substance. Lawmakers rushed to extend a 3.4 percent rate on certain new loans instead of allowing the rate to revert back to 6.8 percent. That doesn’t sound bad to borrowers, but it reflects the weird fact that those loan rates aren’t pegged to anything real, just to the whims of Congress, which inevitably uses student loans as political playthings.

This year, President Obama proposed pegging loan rates to the rate at which the government borrows, plus a relatively modest markup. On Thursday, the House Education and the Workforce Committee endorsed a similar policy. Its bill may reach the House floor this week. Other plans are being discussed in the Senate.

Though each plan differs in some important details, the basic point is that rates would reflect economic conditions instead of politics. Under any of the proposals, students — risky borrowers with little-to-no credit history — would still get a tremendous bargain relative to what private lenders would offer. But the size of that interest-rate subsidy wouldn’t unfairly fluctuate with Treasury yields. And generous income-based repayment programs would effectively limit the interest rate many borrowers would face over the course of repayment. Backers of the president’s plan and those behind the House’s say the proposals are designed to be roughly budget-neutral over 10 years. There’s no reason to delay passing such a policy.

Yet these plans are also limited. Interest-rate setting is just the beginning of the debate that lawmakers must have on student borrowing. For example, the Wall Street Journal recently profiled a woman who borrowed more than $300,000 in graduate student loans and used some of it to finance home repairs. But, depending on where she ends up working, she could be eligible for a massive principal and interest amnesty.

Instituting an income-based repayment program is an important piece of the system to ensure that students don’t face crushing debts after graduating. But lawmakers must also fix the kinks that may encourage excessive borrowing with too few restrictions, particularly for those who end up with large incomes.

Rep. John Kline (R-Minn.), chairman of the House education committee, says that these and other issues will be part of a broader discussion Congress will have as it considers reauthorizing the Higher Education Act, which expires the end of this year. For the health of the country’s vaunted college and university system, not to mention the federal budget, lawmakers must maintain their strong start and do some serious policymaking this year.

To learn more about H.R. 1911, visit edworkforce.house.gov/SmarterSolutions.

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