Moving in the Right Direction

Picture it. Washington, D.C., 2013. Policymakers are embroiled in a self-made crisis as student loan interest rates are on the brink of doubling. The president joins House Republicans in calling for a long-term, market-based solution that would get Washington out of the business of arbitrarily setting student loan interest rates. And that’s exactly what Congress delivers.

Three years ago, under the leadership of Education and the Workforce Committee Chairman John Kline (R-MN), House Republicans put forward and passed the Smarter Solutions for Students Act (later known as the Bipartisan Student Loan Certainty Act). This law implemented a permanent market-based solution to student loan interest rates—protecting millions of borrowers from a costly spike in rates.

But the road to passage wasn’t easy. There were political theatrics from Washington Democrats and flip-flopping from the Secretary of Education, all resulting in a missed-deadline and spike in rates. Fortunately, in the end, the administration and the Senate joined the House in doing what was best for students, families, and taxpayers by enacting a responsible, long-term, market-based solution.

In fact, just this week, we learned the undergraduate rates on Stafford Loans would drop from 4.29 percent to 3.76 percent for the 2016–17 school year. Had Congress kicked the can down the road as some suggested, today’s students might be facing higher interest rates and even more uncertainty about their college costs.

As Chairman Kline said three years ago:

“Changing the status quo is never easy. Returning student loan interest rates to the market is a long-standing goal Republicans have been working toward for years … I applaud my colleagues on the other side of the aisle for finally recognizing this long-term, market-based proposal for what it is: a win for students and taxpayers.”

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