Republicans on the House Education and the Workforce committee pushed through legislation today to make college more expensive for students and families, forcing them into loans with skyrocketing interest rates that fluctuate year by year, further compounding the student debt crisis. The legislation (H.R. 1911) would charge millions of students and families nearly $4 billion over the next decade in additional interest charges relative to current law.
"Our students and families deserve better than this bait and switch scheme we're voting on today," said Rep. Miller, the senior Democrat on the committee. "Study after study shows the damaging domino effect student debt is having on our economy. Instead of reducing student debt, this bill increases student debt. A low-income, four-year borrower enrolling in college next year would pay more interest on her student loans under the Republican proposal than she would if we took no action."
If Congress fails to act by July 1, interest rates on subsidized students' loans will double from 3.4 percent to 6.8 percent. Even worse, according to the nonpartisan Congressional Research Service (CRS), the Republican bill would increase student debt and leave students worse off than if these interest rates were allowed to double on July 1.
Specifically, CRS found that:
* 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.
* Students who borrow the maximum amount of subsidized and unsubsidized Stafford loans over five years would pay $14,430 in interest under the Republican bill, $12,598 if subsidized loans were allowed to double to in July, or $7,965 if rates don't double.
* Parents and graduate students would also pay more under the Republican bill. For instance, a parent who borrows the maximum amount for their child over five years would face $35,848 in interest payments under the Republican bill, more than the $27,956 under current law.
Committee Republicans voted against Democratic amendments to keep interest rates low at 3.4 percent and allow Congress time to work on a long-term solution to address student loans, college costs, and affordability during the reauthorization of the Higher Education Act.
Democrats offered two amendments during the markup.
Rep. Joe Courtney (D-CT) offered an amendment that would freeze subsidized Stafford Loans at 3.4 percent for two years. The Courtney Amendment ensures interest rates do not double for the neediest students on July 1. Republicans voted against this amendment.
"Preventing the interest rate on subsidized Stafford student loans from doubling should be a no-brainer," said Congressman Courtney. "Even as we begin work on a long-term approach to rein in skyrocketing student loan debt, I'm disappointed that Committee Republicans were unwilling to provide parents and young people the peace of mind that, in the short term, their interest rates will not soar further. With student loan debt exceeding credit card debt, auto loan debt, and $1 trillion, we have a crisis on our hands. Failing to address it today is an abdication of responsibility."
Rep. John Tierney (D-MA) offered an amendment, similar to legislation introduced by Senator Elizabeth Warren (D-MA), which would set Stafford loan interest rates to the rate banks get from the Federal Reserve. Current rates provided to the largest banks are set at 0.75 percent. Republicans voted against this amendment.
"While the same Wall Street banks that brought our financial system to the brink of disaster can access 'cheap' money, middle-class students are having to borrow at a much higher rate to finance their college education," said Rep. Tierney. "That's unjust and offensive. My amendment would even the playing field and provide students and families across the country with real relief. Congress must take immediate action to stop the doubling of the student loan interest rate on July 1, and my amendment and the one offered by my colleague, Joe Courtney of Connecticut, are fair and responsible solutions."
The committee also approved a bill that would provide students and parents with information about college costs. The Improving Postsecondary Education Data for Students Act (H.R. 1949) would to convene an advisory committee to conduct a study on the factors students and families have, want, and need when researching their postsecondary education options. Democrats supported H.R. 1949.