Today, Congressman Jim Langevin (D-RI) voted against the GOP "Making College More Expensive Act." Despite Republican claims that it would help students, the bill would actually make college more expensive for students and families, forcing them into loans with skyrocketing interest rates that fluctuate year by year and further compounding the student debt crisis. According to the Congressional Budget Office, the bill would charge millions of students and families $3.7 billion over the next decade in additional interest payments relative to current law.
According to the nonpartisan Congressional Research Service, the Republican bill is even worse for students and families than allowing interest rates to double. Under the Republican bill, students who borrow the maximum amount of subsidized and unsubsidized Stafford loans over five years would pay nearly $2,000 more in interest costs than if interest rates doubled.
"The ever-increasing cost of tuition is creating a permanently indebted generation of graduates," said Langevin. "Rather than waging another partisan fight on a bill that will not help our students and has no chance of becoming law, we should be providing real relief to students and their families by continuing low interest rates and addressing the student debt crisis and college affordability in a comprehensive way."
Under the GOP bill, interest rates on loans would be reset every year, similar to adjustable rate mortgages. So while a loan taken out by a freshman may start out low, that student will not get to keep the low interest rate for the life of the loan.
The House Republican Leadership has refused to allow consideration of a Democratic bill to block student loan rates from doubling on July 1. The Democratic proposal, cosponsored by Langevin, would allow students to continue benefitting from historically low interest rates by freezing the current low 3.4 percent rate on subsidized Stafford loans for the next two years.
Langevin also submitted the following statement for the record following his vote.
The Honorable Jim Langevin
Extension of Remarks on H.R. 1911
May 23, 2013
I rise today in opposition to H.R. 1911, the Making College More Expensive Act. This misguided bill would actually increase the cost of student loans and make it harder for graduates to escape the crushing burden of college debt.
It is a matter of critical national interest that we ensure our colleges and universities are turning out a well-educated, highly-qualified workforce. Unfortunately, the ever-increasing cost of tuition is creating a permanently indebted generation of graduates who are too often paying off crippling debt instead of building fulfilling careers that will increase their financial mobility and our country's economic competitiveness.
We should be working together to solve this looming crisis. Regrettably, this partisan measure makes college more expensive by tying student loan interest rates to the 10-year Treasury note, plus an additional 2.5 to 4.5 percent, and prevents students from locking in a fixed rate. Since these rates will reset every year, by the time next year's freshmen graduate, they will be paying more than double today's current rate for subsidized Stafford loans. The Congressional Budget Office estimates this will produce an extra $3.4 billion in federal revenue, meaning the government will be profiting off the extra debt students incur. I find this completely unacceptable.
That is why I am a cosponsor of a bill, introduced by Congressman Joe Courtney, to extend the current rate of 3.4 percent on Stafford loans for an additional two years. Rather than waging another partisan fight on a bill that will not pass the Senate and the President is prepared to veto, we should consider legislation that has a real chance of becoming law and that will provide real relief to students and their families. What we have before us today is a bait-and-switch scheme, promising benefits that cannot be realized for another four years and that can in no way be guaranteed.
As part of the upcoming reauthorization of the Higher Education Act, we should take on student loans as part of a comprehensive effort to address student debt, college affordability and the financial aid system as a whole. We can take advantage of today's historically low rates without making empty promises to college students.