Senator Mazie K. Hirono today voted against a Senate plan that would lock-in major interest rate hikes on federal student loans for the long term. While the plan - known as the the Student Loan Certainty Act - would keep rates low in 2013, it would allow student loan interest rates to balloon over the next two to four years to even higher rates than if Congress did nothing. In addition, the higher long-term interest rates would force students to pay an extra $715 million to the federal government over 10 years.
Instead, Hirono voted for two measures offered by her colleagues that would have improved the bill to lower the borrowing costs for future Hawaii students.
"There is honest disagreement among my colleagues about how to deal with this interest rate increase. While this proposal would help students in the very short term, I believe we should not lock-in interest rate hikes and significantly increase the borrowing cost for future Hawaii college students like this plan stipulates," Hirono said. "The government should not profit off of students, since these students will pay our country back by getting a good education and adding value to our workforce. While this deal would slightly lower student loan rates for the first few years, future Hawaii college students would be forced to pay rates even higher than if Congress does nothing.
"We must find a way to make college more affordable for students--not just for some 20,000 Hawaii undergraduates who will utilize these loans in the fall, but also for tens of thousands more students who will depend on these loans in the future."
Hirono cosponsored and voted for two amendments that would keep borrowing costs low. One measure offered by Senators Jack Reed and Elizabeth Warren would cap interest rates and prevent them from going any higher than current law's 6.8%. Another plan, offered by Senator Bernie Sanders, would sunset today's Senate plan after two years, so interest rates would return to current law's 6.8% without any further congressional action. Neither of the amendments could overcome a Republican filibuster.
In Hawaii, over 20,000 undergraduate students, 3,300 graduate students, and 2,300 parents of Hawaii students are projected to use federal education loans in the 2013-14 academic year. Under the Senate plan, undergraduate borrowers would see their interest rates on new student loan increase each fall -- from 3.4% in 2012 to 7.25% by 2018 or earlier. The plan has no effect on students' existing loans.