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Mr. REED. Mr. President, July 1 is less than 7 weeks away, and unless we act the interest rate on need-based student loans will rise from 3.4 percent to 6.8 percent.
Student loan debt is second only to mortgage debt for American families. Now is not the time to add to student loan debt by allowing the interest rate on need-based student loans to double.
I have worked with Chairman Harkin, Leader Reid, and many of my colleagues to develop a fully offset, 2-year extension of the current student loan interest rate. Instead of charging low- and moderate-income students more for their student loans, the Student Loan Affordability Act will keep rates where they are while closing loopholes in the Federal Tax Code. We should take up this legislation and pass it without delay.
I know many of my colleagues, including myself, are working on longer term solutions that more effectively reflect market rates--but my concern is, frankly, that we will run up against this July 1 deadline and we will not have the long-term solution in place. We have to do something. That is why I urge us to pick up this legislation as quickly as possible.
Our first priority must be to reassure students and families that the interest rate will not double from 3.4 percent to 6.8 percent on July 1. We have to do that. Then we can work toward a longer term solution. We also owe it to them to commit to a full and thoughtful process for devising this longer term solution, to develop an approach that will set interest rates and terms and conditions on all student loans that will be more reflective of market rates, but also more beneficial to students and their families who are borrowing this money.
Senator Durbin and I have put forward a long-term proposal that would set student loan interest rates based on the actual cost of operating the program so the Federal Government would not be offering student loans at a profit.
There are other long-term proposals on the table. Some of them, such as the one reported out of the Education and the Workforce Committee in the House today, could actually leave students worse off than they would be if the rates were to double. We need to take the time to fully consider comprehensive solutions to our student loan debt crisis--solutions that will make college more affordable, not less so. Rather than rushing to overhaul the Federal student loan program without fully considering the impact on students and college affordability, the Student Loan Affordability Act will secure low interest rates until Congress can act on the reauthorization of the Higher Education Act. Without swift congressional action, more than 7 million students will have to pay an estimated additional $1,000 for each loan.
These are the students who need the help the most.
Sixty percent of dependent subsidized loan borrowers come from families with incomes of less than $60,000, while 80 percent of independent subsidized loan borrowers come from families with incomes below $40,000.
Unlike Republican proposals that would balance the budget on the backs of students by charging them higher interest rates or make students vulnerable to exorbitant interest rates in the future, this legislation which we are proposing will help ensure that college remains within reach for students who rely on Federal loans to pay for their education. This legislation is fully paid for.
Specifically, the pay-fors would be limiting the use of tax-deferred retirement accounts as a complicated estate planning tool, closing a corporate offshore tax loophole by restricting ``earnings stripping'' by expatriated entities, and closing an oil-and-gas industry tax loophole by treating oil from tar sands the same as other petroleum products.
We should not be collecting additional revenue from students when we can eliminate wasteful spending in the Tax Code, and we should not allow--not allow--the interest rate to double on July 1.
I hope all my colleagues will support, as the first step, the 2-year extension until we can truly come up with a thoughtful, comprehensive approach to long-term student lending in the United States.
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