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Ms. WATERS. Mr. Speaker, I rise today in strong opposition to H.R. 1911--the Smarter Solutions for Students Act. Mr. Speaker, this terrible bill should instead be called the Making College More Expensive Act because that is exactly what it would do if passed through Congress.
Instead of making college more affordable for students, H.R. 1911 would burden students with an additional $4 billion in loan interest charges relative to current law. According to a recent study by the Federal Reserve, there is plenty of evidence that student loan debt has negatively affected a student borrower's participation in our economy. With the national student loan debt already topping $1.1 trillion, H.R. 1911 would only deepen the college debt crisis students are now experiencing in America.
Over the past couple of years, legislators have been repeatedly warned about the impacts student loan debt has on economic growth. Even the Federal Reserve has identified that student debt is the likely cause of delays by American college graduates in purchasing homes and cars or starting families.
H.R. 1911 is a bait and switch scheme that does nothing to remedy this issue. This bill only makes it more expensive to attend by forcing students and families to accept loans with skyrocketing interest rates that increase annually.
Just this past weekend, students from all over the country in the class of 2013 graduated with an average debt load of $30,000 (Source: Mark Kantrowitz--publisher of FinAid.org analysis). When adjusted for inflation, that's roughly double the average amount of debt students graduated with 20 years ago.
The passage of this bill would continue this trend by changing student loan interest rates from year-to-year based on the 10-year Treasury note, marked up by 2.5 percent to 4.5 percent. As a result of this variable rate, federal student loans taken out by incoming freshmen class of 2013 would at first be at a lower rate; however, by the time this class of freshman graduates in 2017, the interest rate on their loans is projected to be 7.4 percent, more than double today's current 3.4 percent rate for subsidized Stafford loans.
The Consumer Financial Protection Bureau, CFPB, released a report this month citing the long-term impacts of high student loan debt. The CFPB found ``As a growing number of young consumers have been unable to participate more fully in the housing marketplace, the segment of young consumers that remains interested in becoming first-time homebuyers may face new barriers to homeownership. The National Association of Home Builders (NAHB) stated that higher student debt burdens ``impair the ability of recent college graduates to qualify for a loan.'' According to NAHB, high student loan debt has an impact on consumers' debt-to-income (DTI) ratio--an important metric for decisions about creditworthiness in mortgage origination.
I have long championed the importance of developing the next generation of entrepreneurs and innovators to lead our country boldly in the 21st Century. Yet, the CFPB report found that student loan debt is poising a barrier to young entrepreneurs.
According to the report by CFPB ``For many young entrepreneurs, it is critical to invest capital to develop ideas, market products, and hire employees. Student debt burdens require these individuals to divert cash away from their businesses so they can make monthly student loan payments.'' Is this the future we want for our nation's student borrowers? Instead of building businesses, buying homes, and having families they are being crushed by the weight of student loan debt. This is not the future I want for current and future student borrowers.
Attaining an education is one of our Nation's founding principles. We should be working on finding solutions to lower the cost of education for our nation's youth rather than debating legislation designed to earn another $3.7 billion in revenue from struggling student borrowers. This bill is egregious.
Mr. Speaker, it is clear to my Democratic colleagues and I that college affordability is still a pervasive issue in America. It is also clear, that this issue will require more than just a temporary fix. In order for us to maintain our competitive edge as a nation, we need to support every single American who desires to pursue a higher education. Congress needs to pass meaningful legislation that actually solves this problem and not perpetuate it. Let's start by voting no on H.R. 1911 and support our American students by not saddling them with insurmountable debt.
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