U.S. Senators Joe Manchin (D-WV), Richard Burr (R-NC), Tom Coburn (R-OK), Lamar Alexander (R-TN), and Angus King (I-ME) plan to introduce tomorrow a bipartisan compromise, the Bipartisan Student Loan Certainty Act, to avert student loan rates from doubling on July 1st and provide a permanent solution that would lower and fix interest rates for 100 percent of newly issued student-loans.
Manchin said: "This bipartisan agreement not only makes sure student rates will not double on July 1, but this is a long-term fix that will lower rates for all students and will save students $30 billion over the next three years, making sure anyone who wants an education, can afford one. This deal shows the American people that bipartisanship and common sense are alive in Washington. We can find common ground to help our students and ensure the next generations of Americans have the same wonderful educational opportunities that we have always had."
Burr said: "I am pleased we were able to find a permanent, market-based solution to addressing our nation's student loan problem. This agreement lowers rates for 100 percent of America's students and families and gives them the certainty they need to plan for college and beyond -- all while reducing the deficit. Our compromise satisfies the framework requested by President Obama and Secretary Duncan, has the support of members of both parties in the United States Senate, and is a no-brainer for the American people. Let's do the work our constituents sent us here to do; put the politics aside and pass this bill."
Coburn said: "This compromise will allow market forces to help students pay for college. Students and families should not have to be held in limbo while waiting for Congress to set yet another arbitrary rate. This compromise is a permanent solution that will benefit virtually all borrowers and taxpayers. This bill allows borrowers to take advantage of today's low rates while protecting taxpayers from subsidizing higher, artificial rates. I call on Senate leadership to bring this bill to the floor immediately for a vote."
Alexander said: "We have coalesced around a common idea that will cut interest rates nearly in half for 11 million undergraduates who will be taking out loans this summer to go to college. It will lower interest rates immediately on 100 percent of new student loans after July 1. For undergraduates, the rates for new loans will be less than 4 percent. The proposal would continue the option students now have to cap interest rates at 8.25 percent when consolidating their loans. It also continues the cap on a student's annual loan repayment at no more than 10-15 percent of a student's income. This proposal is fair to students and fair to taxpayers, and combines the best ideas from the president's budget, the House-passed bill, and the work of this bipartisan coalition of senators. There's no reason Congress shouldn't pass it and the president shouldn't sign it before July 1."
King said: "I am pleased to join this bipartisan group of Senators in putting forward a sensible, compromise proposal that will not only lower student loan interest rates for millions of students, but will also maintain important protections and adopt a market-based approach to get Congress out of the business of setting arbitrary rates with no connection to the actual cost of borrowing. Our solution successfully builds on the many credible proposals put forward by members on both sides of the aisle, as well as the President, to help make college an affordable reality. This bipartisan bill demonstrates that we can bridge the partisan divide and work together in the best interest of the American people."
The Student Loan Certainty Act requires that, for each academic year, all newly-issued student loans be set to the U.S. Treasury 10-year borrowing rate plus 1.85% for subsidized and unsubsidized undergraduate Stafford loans; plus 3.4% for graduate Stafford loans; and plus 4.4% for PLUS loans. The interest rate would be fixed over the life of the loan and the cap on interest rates for consolidated loans would remain at 8.25%. The Congressional Budget Office has determined this legislation would reduce the deficit by $1 billion over ten years.