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House GOP Votes to Make College More Expensive for Students and Families
WASHINGTON – House Republicans voted today to advance legislation that makes a college education more expensive for students and families on a 221 to 198 vote. The bill, H.R. 1911, would make college more expensive by charging students and families nearly $4 billion more in higher interest payments for their student loans. The legislation would also force students into loans with interest rates that reset every year of the loan, similar to the much discredited adjustable-rate mortgages.
“Rather than making it more affordable for students and families to pay for college, House Republicans have passed a bill to make it more expensive,” said Rep. George Miller (D-Calif.), the senior Democrat on the House Education and the Workforce Committee. “The American people know that students and their families are in too much debt. Unfortunately, the Republican bill will make debt worse for student than doing nothing. It’s really that bad.”
If Congress fails to act by July 1, interest rates on subsidized student loans will double from 3.4 percent to 6.8 percent for millions of the neediest students. This year and every year Congress doesn’t act will cost a student borrower $1,000. Failure to act now will add $4.3 billion to students’ debt burden for next year’s loans alone.
"I find it shameful that H.R. 1911 would reduce the federal deficit on the backs of students and parents by saddling them with almost $4 billion in additional loan interest charges and leave students worse off than if Congress allowed student loan interest rates to double on July 1st,” said Rep. Rubén Hinojosa (D-Texas), the senior Democrat on the Higher Education and Workforce Training Subcommittee. “In order for our country to prosper we must have an educated workforce. In order to accomplish that, we must make college affordable and accessible. Unfortunately, our student loan debit crisis is crushing the dreams and aspirations of students and college graduates. High levels of debt can create obstacles for young people who hope to start a family, purchase a home, and save for retirement. At this rate they cannot accomplish those standard goals that every American should be able to achieve. This only sets our country backward, not forward.”
The independent, nonpartisan Congressional Research Service (CRS) released a report showing how H.R. 1911 would increase the cost students and families have to pay for college. CRS found that students and families would pay higher interest costs under H.R. 1911 than they do today – even if interest rates doubled as scheduled for the neediest students in July. For example, students who borrow the maximum amount of subsidized Stafford loans over five years would pay $10,109 in interest payments under the Republican bill, $4,174 if rates were kept at 3.4 percent or $8,808 if rates are allowed to double to 6.8 percent in July.
“My Republican colleagues have been talking about how this bill offers simplicity and predictability for students. Well, they’re partially right. It is predictable - under the Republican bill students predictably will pay more! On behalf of the students and families across my district and our country, I am extremely disappointed that House Republicans pushed through this proposal today. I will continue to press for real action that will actually provide relief to our students and families and fight to implement solutions to level the playing field for those looking to attend college,” said Rep. John Tierney (D-Mass.).
Republicans rejected all efforts to make college more affordable for students and families – even proposals offered by members of their own party. Republicans rejected an amendment by Rep. Joe Courtney (D- Conn.) that would extend the current 3.4 percent interest rate on subsidized Stafford student loans for two years and allow Congress to consider long-term, comprehensive solutions, to address both rising college costs and affordability, during the reauthorization of the Higher Education Act. Republicans also rejected an amendment offered by Rep. Tom Rice (R-SC) that would lower the interest rate students would have to pay under the Republican plan.
“This bill is just plain bad policy,” said Rep. Courtney. “In the face of exponentially-mounting student loan debt, House Republicans, almost incomprehensibly, are making the problem worse. Student loan debt in the United States today exceeds credit card debt and auto loan debt, and it is affecting life decisions like whether to buy a home or get married. Instead of locking in low interest rates and buying time to find a long-term solution to this crisis—as my amendment would have done—House Republicans are doubling down on a policy that leaves young people high and dry.”
The Republican bill – by providing interest rates on student loans that will be reset every year like using variable rates similar to adjustable-rate mortgages—fails to lock in historically low rates for students in the near term like the Democratic proposals do. Rep. Miller offered President Obama’s revenue neutral student loan proposal as an amendment. The amendment sets fixed variable interest rates to save students $30 billion in the next six years while expanding income based repayment to support struggling borrowers. Republicans rejected this amendment.
“Under this bill, student interest rates would be subject to the whims of the market. Today, interest rates are at an all-time low. But what about 5…10…15 years from now? We are not subprime lenders. The federal government should not be profiting from students,” said Rep. Susan Davis (D-Calif.).
Republican’s defeated an effort lead by Rep. Kyrsten Sinema (D-Ariz.) to prevent students and parents from being subjected to an initial teaser low-interest rate that would reset every year under the Republican bill based on the market. Since interest rates are at historic lows, it is predicted that rates will increase over time, drastically increasing the amount owed on loans. It would also ban false advertising that hides the true cost of Federal student loans, including year-to-year rate increases, the total amount owed, and the number of years a borrower may take to pay it off. Republicans voted to reject this amendment to prevent the creation of an adjustable-rate student loan.
Student groups and organizations such as the U.S. Public Interest Research Group, Young Invincibles, the Education Trust, and the Institute for College Access & Success have opposed the Republican bill, saying that it would result in an increase in student debt and fail to provide relief for the most neediest students and families already struggling.
Watch this video to see how H.R. 1911 actually works.
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