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Kline Statement: Hearing on "Keeping College within Reach: Examining Opportunities to Strengthen Federal Student Loan Programs"
As prepared for delivery.

Last summer, debate about student loans reached a fever pitch thanks to a scheduled increase in the interest rate for subsidized Stafford Loans made to undergraduate students. 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 wants to see student loan interest rates increase, particularly as young people continue to struggle with high un- and underemployment. 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.

Today’s hearing provides an opportunity to explore the merits of a market-based system. As many of you are aware, such a system was previously in place from 1992 through 2005. Had it remained, interest rates on student loans could be less than 3 percent today.

In addition to our discussion on student loan interest rates, we must also begin a larger conversation on the state of federal student aid programs as a whole. Supporting higher education remains a top priority in Washington. Each year, taxpayers dedicate billions of dollars to help students afford to attend the college of their choice. In the 2011-2012 school year, students received more than $237 billion in aid, of which the federal government provided nearly $174 billion, or 73 percent.

Given this significant investment, it is troubling to learn students struggle to navigate the various federal student aid programs available to help them pay for college. More work must be done to help students and families understand the federal student aid system and make informed choices about their higher education options. Congress has a responsibility to explore ways we can strengthen and streamline federal student aid programs, making the process simpler for students, institutions, and families.

In his fiscal year 2013 budget request, President Obama proposed a number of initiatives affecting federal student aid programs, including a plan to change how three campus-based aid programs – Supplemental Education Opportunity Grants, Perkins Loans, and Work-Study – are distributed to shift funds away from institutions where the administration believes tuition is too high.

While my Republican colleagues and I continue to support the basic principles of competition and transparency to help encourage lower costs in higher education, we remain concerned that such policies could lead to federal price controls and more confusion for institutions and borrowers.

Though we are still waiting for the president’s delayed fiscal year 2014 budget proposal, I hope the administration will abandon these previous proposals and instead illustrate a willingness to work with Congress to improve existing programs while demanding states and institutions do their part to tamp down college costs.

Before I yield to the senior Democratic member of the committee, George Miller, I would be remiss if I didn’t note my continued concerns with the Department of Education’s management of the Direct Loan program, which is responsible for the implementation and repayment of all federal student loans. Borrowers continue to report a range of problems, including missing financial information, unexpected changes to loan amounts, poor customer service, difficulty rehabilitating loans, and data breeches.

The committee has been working with the Government Accountability Office to investigate some of these issues, and I hope we are able to solve some of these problems as we move into the reauthorization of the Higher Education Act. With that said, I look forward to a productive discussion with my colleagues and our witnesses on proposals to improve and simplify federal student loan programs.


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