Providing for Consideration of H.R. 1911, Smarter Solutions for Students Act

Floor Speech

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Ms. FOXX. Mr. Speaker, House Resolution 232 provides for a closed rule providing for consideration of H.R. 1911, the Smarter Solutions for Students Act.

As many of us know, on July 1, today's 3.4 percent subsidized Stafford loan interest rate is set to double to 6.8 percent for millions of current students, all because elected officials made a promise they couldn't afford to keep for the long haul. Student borrowers shouldn't have to ride the roller coaster of political largess, wondering every year whether Congress will intervene in time to keep their student loan rates low. And taxpayers shouldn't be expected to foot the bill whenever Members of Congress promise more than they can deliver.

For the sake of students, families, and taxpayers, before July 1 we need to move our Federal student loan programs away from politics. Student loan rates should not be subject to the whims of Washington or seized as bargaining chips.

The Smarter Solutions for Students Act will remove politics, uncertainty, and confusion from the rate-setting equation and instead anchor student loan interest rates on the 10-year Treasury note, not just for 4 years, but for good. By tying rates to the market, the Smarter Solutions for Students Act establishes a predictable rate for loan calculation insulated from the politics and posturing of Washington.

House Republicans aren't alone in finding the answer for predictability in
the market. President Obama offered a similar market-based interest rate plan in his 2014 budget proposal, and some of my colleagues across the aisle have voiced openness to utilizing the market to set interest rates as well.

In developing this legislation, the committee has attempted to build on this common ground and work in good faith with the administration to improve the Smarter Solutions for Students Act and get it to the President's desk by July 1. Students, families, and taxpayers deserve a long-term solution, not more can-kicking from Washington. The Smarter Solutions for Students Act puts an end to the temporary fixes and campaign promises that have failed to deliver the best rates to students.

This legislation offers predictability, simplicity, and the ability for students to take advantage of low rates, even after graduation, a need particularly acute in today's jobless economy. The American people deserve the clarity, certainty, and protection the Smarter Solutions for Students Act offers.

I urge my colleagues to vote for the rule and the underlying bill.

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Ms. FOXX. Mr. Speaker, I yield myself such time as I may consume.

It's important to remember how we landed in this predicament to begin with. Why are we now facing this student loan interest rate cliff?

In a push to win votes during the 2006 campaign cycle, Democrats pledged to cut student loan interest rates in half across the board permanently. After gaining control of Congress in 2007, they realized this campaign promise was far too expensive. Instead, they championed legislation to phase down gradually the interest rate on one type of Federal student loan--subsidized Stafford loans made to undergraduates--from 6.8 percent to 3.4 percent over 4 years. Once the law expired in 2012, the interest rates would jump back up to 6.8 percent.

Instead of working with Republicans on responsible solutions that would help make higher education more affordable for students in the long run, the Democrat Congress chose to make false promises to borrowers and kick the can down the road.

Democrats had an opportunity to fix this problem. In 2009, they passed the Student Aid and Fiscal Responsibility Act, which produced large budgetary savings by eliminating the private sector loan program. ``Savings'' should be in quotation marks, Mr. Speaker. But instead of making good on their campaign promises of lower student loan interest rates, Democrats spent all of the funds on other pet projects, including siphoning $8 billion from Federal student aid programs to pay for ObamaCare.

It is time for a long-term solution that gets politicians out of the business of setting student loan interest rates. That is why Republicans approved a 1-year extension of the 3.4 percent interest rate last year to allow time to work on a comprehensive solution. The Smarter Solutions for Students Act is the result of our efforts.

Republicans and Democrats should come together to pass this legislation and ensure students and families don't have to worry about politicians setting arbitrary interest rates or kicking the can down the road for years to come.

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Ms. FOXX. I yield myself such time as I may consume.

Mr. Speaker, in my career before coming to Congress, I was the director of an Upward Bound special services program. I was an adviser for students at Appalachian State University. I was the president of a community college. For all of my life, I have devoted my time to helping students--particularly disadvantaged students--who wanted to go to college, who wanted to do the same kind of thing that I did as a disadvantaged person, and that is to get a great education and use that education to better my life.

I am offended that my colleagues would say that what I want to do is to stop people from going to college or to hinder them in any way from achieving the American Dream. My whole goal all my life has been to help other people, particularly young people, and I believe my experience shows that.

So, Mr. Speaker, that's not what this bill is about. This bill is about taking away the arbitrary control of Members of Congress who think of themselves as smarter than everybody else in the world, and it is about allowing the market to work.

The current Federal loan program is broken. An overwhelming majority of students are stuck with interest rates on loans that do not match the current low interest rate environment because of failed Democrat campaign promises to cut student loan interest rates in half permanently. These students are also often confused about why most of their Federal loans are fixed at nearly 7 percent when the market rate is much lower, and they question why each type of student loan has a different rate. To put it simply, student borrowers are getting a raw deal, and they know it.

Under the legislation, student loan interest rates would reset once a year and move with the market, much like they did from 1992 to 2006. This bill is the only viable plan on the table that is fiscally responsible, that helps students and protects taxpayers. We should pass this bill immediately. According to the Congressional Budget Office, the proposal does not cost any additional revenue to implement over the next 5 or 10 years.

H.R. 1911 will provide stability and certainty for students making decisions about how to finance their postsecondary education. They will be assured year after year that the interest rate on their student loans will be similar to market conditions, and they won't have to wonder whether Congress is going to make arbitrary changes to interest rates. The bill offers students the ability to take advantage of interest rates when they're low, and it protects them with affordable caps in high-rate environments. The bill continues current law in which students have the option to consolidate their loans after graduation and to lock in a fixed interest rate for the life of the loan. Mr. Speaker, these are commonsense provisions that will benefit student borrowers greatly.

The legislation also ensures students can continue to take advantage of a number of generous Federal repayment options and debt management programs available to help those experiencing difficulty in repaying their loans. For example, students can enter one of the income-based repayment plans that caps their monthly payments at affordable levels and provides forgiveness after 20 or 25 years. For students in the public sector, the program allows loan forgiveness after 10 years. The Smarter Solutions for Students Act is a long-term, comprehensive solution that gets Washington politicians out of setting interest rates on Federal loans, and it will better serve the interest of students. We should pass this rule and the underlying bill now.

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Ms. FOXX. Mr. Speaker, During the 2006 election cycle, Democrats made student borrowers a promise they did not keep. As a result, interest rates on student loans are set to double in a matter of weeks. The Smarter Solutions for Students Act will provide student borrowers with the certainty and stability they need to finance their education.

Today's graduates are facing severe economic headwinds that make finding a job, repaying student loans, and starting a family extremely difficult. These students want nothing more than the opportunity to earn their own success. That's the American Dream. But for many of them, that dream seems hopelessly out of reach. We can do better, Mr. Speaker.

The overall unemployment rate is 7.5 percent. That's hardly better than the day President Obama took office. Twelve million Americans are unemployed and anxious to get back to work, and 7.9 million Americans are underemployed.

According to the Joint Economic Committee, the slight decline in the unemployment rate is largely a mirage created by declining labor force participation. If the labor force participation rate had not declined since January 2009, the unemployment rate would be 10.9 percent instead of 7.5 percent. As we all know, this is well above the officially reported rate and the stimulus promise of 5.1 percent.

According to the Bureau of Labor Statistics, the number of involuntary part-time workers increased in April by 278,000 to 7.9 million. These are people working part time because their hours were cut back or because they are unable to find a full-time job.

There were 835,000 so-called ``discouraged workers'' in April alone. Discouraged workers are those ``persons not currently looking for work because they believe no jobs are available for them.''

Mr. Speaker, these people aren't just jobless; they're hopeless and they deserve better. It's time to get America working again. But the failed policies of President Obama and Senate Democrats--higher taxes, more spending, and bigger government--are designed to continue to fail to create jobs or spur economic growth. The effects of President Obama's runaway spending, spiraling deficits, and mounting debt are being felt by every American.

When President Obama took office, there were 31.9 million Americans using food stamps. Today, 47.3 million Americans use food stamps. That's an increase of 15.4 million people. Today, 15 percent of the entire U.S. population receives food stamp assistance. That is, by far, the largest number in history.

Mr. Speaker, the policies of this administration are taking us in the wrong direction. The Republicans are focused on creating jobs and making things better for all Americans, and we need to pay attention to those policies. We can pass this rule, pass this bill, and get us going in the right direction for college students.

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Ms. FOXX. Mr. Speaker, In my last comments, I talked about statistics and the effect of the policies of this administration. These statistics ultimately say the same thing: the Obama economy is making life more difficult for all Americans, especially young people.

Fortunately, House Republicans have a plan to restore economic growth and spur job creation so that graduating students can find employment.

Job creators are being stymied by mountains of regulatory red tape, crippling tax rates, a perplexing Tax Code, needlessly high energy prices, and rampant uncertainty caused by the President's failed leadership. Mr. Speaker, there is a better way.

House Republicans are hard at work passing legislation to help grow the economy and create jobs. Our goal is to tear down the barriers to job creation and unleash the power of American ingenuity so that today's graduates can prosper and succeed and achieve the American Dream.

As part of this plan, we're working diligently to make life easier for student borrowers, cut job-killing red tape that costs small businesses $10,585 per employee each year, reduce gas prices, and create jobs by producing more American energy, which is important since every penny increase per gallon of gas costs consumers $4 million per day. We also need to simplify a job-killing Tax Code that cost Americans $168 billion in 2010 just to comply, prevent job-killing tax hikes on small businesses, and reduce uncertainty by tackling the debt crisis with responsible spending cuts.

The Republican plan will demolish Washington's self-made roadblocks to prosperity and put American job creators back on offense.

The trick to growing our economy is getting politicians out of the way and letting American workers and entrepreneurs do what they do best: create shared prosperity through freedom and innovation. The Smarter Solutions for Students Act is an important part of this plan. I urge my colleagues to support this rule and the underlying bill.

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Ms. FOXX. Mr. Speaker, my colleague is accusing Republicans of increasing taxes on students. That is a laughable accusation, especially when you look at the number of proposed tax increases included in the Democrat budget resolution. It's almost as disingenuous as their calling for dedicating the 10-year savings generated by the underlying bill to higher education. After all, in 2010, House Democrats passed the Student Aid and Fiscal Responsibility Act, SAFRA, which included language that put $13 billion in savings toward deficit reduction. In the final version of SAFRA, Democrats siphoned approximately $9 billion of the $19 billion in savings to pay for ObamaCare. The rest of those savings went to deficit reduction.

The Smarter Solutions for Students Act is a fiscally responsible plan that generates a small amount of savings based on CBO estimates. It stabilizes Federal loan programs for future generations of students and gets Washington out of the business of setting student loan interest rates.

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Ms. FOXX. Mr. Speaker, my colleagues are concerned about the predictability of the market. What about the predictability of Congress?

Congress is the source of this volatility. Our bill protects students if interest rates rise with caps. Not even President Obama's plan does that.

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Ms. FOXX. Mr. Speaker, I yield myself such time as I may consume.

America's college students, especially those who have studied math, understand that if Washington can't get its act together, their generation will be stuck paying the tab. So they have little sympathy for elected leaders who refuse to face reality by pretending that recklessly spending money we don't have will somehow translate into economic prosperity. It's time to face the simple truth: government spending won't fix our economy.

America's growing debt is real, and Congress has the responsibility to deal with it. The first step must be reining in government spending by passing a balanced budget. That is why House Republicans took the lead and passed H. Con. Res. 25, the Path to Prosperity Budget. Our budget brings spending discipline back to Washington, which balances the budget in 10 years, provides for comprehensive tax reform without raising tax rates, and removes many of the regulatory barriers that prevent employers from hiring new graduates. The House Republican budget stops spending money we don't have by cutting waste, fixing our broken Tax Code, and balancing in 10 years.

A balanced budget will promote a healthier economy, create more jobs for graduating students, and put more money in Americans' pockets. Our budget provides economic security for workers and families, ensures a secure retirement for the elderly, repairs the safety net, and expands opportunities for graduating students entering the workforce.

Republicans have passed a bold budget that tackles America's most pressing fiscal challenges and grows our economy today to ensure the next generation inherits a stronger, more prosperous America.

Mr. Speaker, one of the best things we can do for college students now and in the future is to provide a stronger economy.

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Ms. FOXX. Mr. Speaker, I yield myself such time as I may consume.

My colleagues allege, ``The Republican bill raises interest rates on students when we should be providing them with relief from their student loan debt.'' But let me respond to that, Mr. Speaker.

The Smarter Solutions for Students Act will lower the interest rates for all new borrowers in the Stafford loan and PLUS loan programs rather than just extend an artificially low rate to a small subset of borrowers. This makes Federal loans more affordable for all incoming students and parents. The underlying bill helps all students, including those borrowers receiving subsidized loans, whose loans are slated to double, based on the irresponsible actions of the other side.

The bill includes a reasonable cap--something missing in the administration's budget--which protects borrowers in high interest rate environments. If Democrats think the 8.5 percent cap is too high, then let's see their fiscally responsible, paid-for proposal to back up their rhetoric.

The legislation also maintains current law allowing borrowers to take out a consolidation loan after graduation, where they can lock in their interest rate for the life of the loan. Students can also take advantage of a number of repayment plans and debt management initiatives such as the income-based repayment program, loan forgiveness programs, and opportunities for deferment or forbearance.

The Smarter Solutions for Students Act is a comprehensive, responsible solution that will benefit all students and parents.

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Ms. FOXX. Mr. Speaker, House Republicans are committed to providing more opportunities for more Americans and helping make life work for more families. This legislation is a great step in that direction.

Student borrowers deserve more than platitudes and empty promises. They deserve real solutions that will improve their lives and help them achieve success.

Our conservative solutions to the challenges facing young Americans today are the right solutions, and the results will speak for themselves. Therefore, I urge my colleagues to vote for this rule and the underlying bill.

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