House Democrats announced that they will introduce new legislation today that will both keep college students' loan rates from doubling on July 1st and reduce the deficit.
The House Democratic bill "Stop the Rate Hike Act of 2012" will keep interest rates on need-based student loans at 3.4 percent next year, saving borrowers an average of $1,000 in loan repayment costs. The bill is fully paid for by ending unwarranted tax subsidies to big oil and gas companies. Additional savings achieved by ending these subsidies to big oil will go to reduce the deficit.
"Our middle-class families simply cannot afford to see student loan interest rates double on July 1st. If Congress does not take action, more than 7 million students nation-wide and some 177,000 in MA will be impacted. That is why we are introducing a common sense, fiscally responsible bill that would extend the 3.4% interest rate for an additional year. Ensuring our students have the opportunity to attend college should be a bigger priority than continuing tax loopholes for Big Oil," said Rep. John Tierney (D-MA), the lead sponsor of the bill.
"There are a number of good options to prevent more than 7 million college students and their families from facing higher college loan costs," said Rep. George Miller (D-CA), senior Democrat on the House Education and the Workforce Committee. "But the first step is agreeing to the problem. Unfortunately, House Republicans are on record to allow the interest rates to double when they voted for the Ryan Republican budget last month. They need to correct their votes from last month, and join President Obama and Democrats in the House and Senate to prevent the rate hike without making middle-class and low-income families pay for it."
Earlier this year, Democrats wrote to the Republican Chairman of the House Education and the Workforce Committee John Kline (R-MN) asking the committee to take action. Thus far, Republicans have taken no action. Last week, House Republicans instead passed a $46 billion tax bill providing the wealthy with an average of $58,000 in new tax breaks next year.
"Congress must not allow student loan rates for college students to double, adding an extra $1,000 to the debt of the average borrower in this tough job market for recent graduates. Closing a tax loophole for wildly profitable oil companies to provide relief for over 7 million students and reduce the deficit should be a no brainer, and I urge the House GOP to work with Democrats on this top priority for middle class families and our long-term economic recovery," said Rep. Tim Bishop (D-NY).
"I am deeply concerned about the cost of higher education and the ever-increasing amount of debt that students are being saddled with. According to the Consumer Financial Protection Bureau, total outstanding student loan debt surpassed $1 trillion late last year, exceeding credit card debt for the first time. Congress can help students and families afford the cost of a college education now by freezing interest rates for need-based loans for more than 7 million students and keeping them from doubling to 6.8 percent on July 1st. Today, I am proud to stand alongside my colleagues to introduce legislation that puts students and families first," said Rep. Rubén Hinojosa (D-TX).
"In 2007, the College Cost Reduction and Access Act, which enacted the 3.4-percent rate, was signed into law with strong bipartisan support," said Congressman Courtney. "I am disappointed that at this point, not a single Congressional Republican has stepped up to support the effort to keep rates there. With just 66 days remaining to prevent this rate hike from going into effect, I am pleased to join my colleagues in support of a one-year fix; however, I remain committed to finding a long-term solution that helps working-class families avoid piling on additional student-loan debt," said Rep. Joe Courtney (D-CT).
"We simply cannot afford to allow interest rates to double on student loans," said Congressman Dale E. Kildee. "In 2007, we worked with the minority to cut interest rates in half and President Bush signed the bipartisan measure into law. Five years later, the majority would rather play election year politics than help millions of Americans with student debt. I remember when compromise and bipartisanship were positive and it wasn't a sign of weakness to agree with the other side. I hope for the sake of this country and the millions of Americans who could see their student loan debt double in July that we can get back to that time before it is too late," said Rep. Dale Kildee (D-MI).
"This bill is critical to ensuring that young Americans have the opportunity to go to college without being saddled with enormous debt. The Republican budget, not surprisingly, ignored the fact that student loan interest rates will double -- adding an average of $1,000 in extra costs to borrowers on July 1st if we don't take action. By making sure that the cash-flush oil and gas industry pays their fair share in taxes, we can protect 7 million students and their families from seeing their student loan rates double from 3.4 percent to 6.8 percent. These matters of fairness -- educational opportunity and a tax code that works for all -- are both addressed by this legislation," said Rep. Pete Stark (D-CA).
"Republicans, in passing their budget last month, put young adults and families throughout the country on notice that they value tax cuts for the very wealthy ahead of low interest rates for students. This vital measure will prevent a massive interest rate increase at the end of June that would affect seven million college students and their families and add $1,000 in costs for the typical student borrower," said Rep. Sander Levin (D-MI).