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Mr. KLINE. Mr. Speaker, I yield myself such time as I may consume. I rise today in strong support of H.R. 1911, the Smarter Solutions for Students Act.
We're here today to address a crisis of Washington's own making. Several years ago, Congress decided politicians, not the free market, were better equipped to set student loan interest rates. Politicians set a fixed rate of 6.8 percent for all loans and then decided to advance legislation based on a campaign promise that would temporarily phase this rate for subsidized Stafford loans down to 3.4 percent.
Last summer, with the expiration of the lower rate scheduled for July 1, 2012, debate about student loans reached a fever pitch. The President began touring college campuses, calling on Congress to prevent the increase that his own party set in motion back in 2007.
As I said at the time, no one wanted to see interest rates double--particularly at a time when one out of every two college graduates was struggling to find a full-time job. But we need to move away from a system that allows Washington politicians to use student loan interest rates as bargaining chips, creating uncertainty and confusion for borrowers.
When Congress approved legislation to temporarily stave off the Stafford loan interest rate increase, my colleagues and I lent our support with the promise that we would use this time to work toward a long-term solution that better aligns interest rates with the free market.
The Smarter Solutions for Students Act accomplishes this goal by simply moving all Federal students loans, except Perkins loans, to a market-based interest rate system. This responsible legislation builds upon a proposal that was actually put forth by the President earlier this year.
The Smarter Solutions for Students Act is a narrow piece of legislation that will provide a lasting solution to the problem facing the Federal student loan program. Unfortunately, Mr. Speaker, some critics would rather kick the can down the road and simply extend the current arbitrary rates at a taxpayer cost of roughly $8 billion. They want to continue the failed status quo and leave politicians in charge of setting rates.
Earlier this week, The Washington Post called it a ``weird fact'' that student loan interest rates:
Aren't pegged to anything real, just to the whims of Congress, which inevitably uses student loans as political playthings.
Students deserve better. They shouldn't have to watch as Washington holds their interest rates hostage each election year. They shouldn't have to deal with the uncertainty that comes with waiting for politicians to cobble together another temporary fix to keep interest rates in line with the market.
We have an opportunity today to get politicians out of the business of setting student loan interest rates. We have an opportunity to provide students with more stability in the long run by putting an end to quick fixes and campaign promises, and we have an opportunity to build upon common ground with the administration and advance a bipartisan solution that's a win for both students and taxpayers.
I urge my colleagues to support the Smarter Solutions for Students Act.
I reserve the balance of my time.
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Mr. KLINE. I yield myself the balance of my time.
Mr. Speaker, as always in these debates, there is a lot of confusion, and there is a lot of misinformation. We are using that old thing about ``figures lie and liars figure,'' and you've got different guesses for interest rates and reports and all those sorts of things, and I want to get into some of that, but some of it is at the core of our differences here. Let's get a couple of things straight.
We watch what has happened as Congress tries to chase an interest rate and gets in political battles year after year. You'll remember that the 6.8 percent that was put in law was considered a good deal. Then there was the plan to take it from 6.8 percent to 3.4 percent for all loans. It didn't work. It costs a lot of money, and it's added to the debt, which is a problem that is still nagging us to this day. So interest rates were taken from 6.8 to 3.4 percent gradually over years. It got down to the point where, for 1 year, the interest rate on subsidized Stafford loans--not the unsubsidized Stafford loans, not the PLUS loans, because we didn't have the money for that--took it down to 3.4 percent for 1 year, and then there wasn't enough money. So, by law, the interest rates on those loans went back up to 6.8 percent, and last year, an election year, we had a big political fight, and that's what you can anticipate, apparently, forever as politicians try to use this as a political pawn and fight over what the student loan interest rates ought to be and what can be afforded.
Mr. Speaker, what can be afforded counts because a problem, as I said, that is continuing to nag us is we have a mountain of debt in this country. We've been running deficits year after year of over $1 trillion. We've got over $16 trillion in debt. We have to face that issue here coming before us. So, while we would like all student loan interest rates to be low and as we want to get them as low as we can, we don't want to add to the mountain of debt that's out there.
We thought that it would be a good idea to let the free market determine what those rates ought to be, and we came forward with a proposal, and we talked about our proposal with our colleagues on the other side of the aisle--staff to staff, hour after hour--trying to beat this out staff to staff and in talking to the White House and the Department of Education about what we're doing and what they're doing and what might work out. I talked to the Secretary of Education before this bill was ever introduced because I agreed with the President and the Secretary that we needed a long-term solution and to get out of kicking this can down the road with annual--or maybe it's semiannual or biannual--political battles.
So we moved to the market. We used a 10-year Treasury that the White House was proposing using--center Republicans wanted to use a 10-year Treasury--and then we worked it, Mr. Speaker. We worked it and worked it to get it as close to budget-neutral as we could possibly get it because we want to help students, and we wanted to give them certainty, and we wanted them not to rely on the whims of politicians here, and we wanted also not to put the burden on the American people and the taxpayer, and we wanted not to add to that debt. So we tried to get it close to zero.
We've seen charts down here--I love charts, particularly colored charts. We've seen charts down here that say that our bill is adding billions of dollars to student debt. Well, we've got a counterproposal over there. I think the gentleman from California offered it. It's the President's proposal, President Obama's plan. That additional debt to students is $3.1 billion--ours is $3.7 billion--over 10 years. We tried to come together on this. Mr. Speaker, I think we can continue to try to come together on this, and we need to move this forward.
There are a lot of things we need to do to help students. Certainly, one of them is to help graduates get to work. Half of all college graduates now are underemployed or unemployed, doing things, working in places, employing none of the skills that they learned in college. We need to get the economy going. We're still asking, Where are the jobs? We need to get Americans back to work. You can't get Americans back to work if you just keep piling on mountains and mountains and mountains of debt and piles of regulations, but that's a fight for another day. Income-based repayment systems we didn't touch in our bill, but there are some interesting proposals out there we want to look at. Right now, with this bill, we're just trying to determine who is going to set interest rates--politicians here or the market.
So here is what we've heard from the other side today: that Washington should be in charge of setting interest rates on student loans, that Washington should be in the business of creating confusion and uncertainty
for student loan borrowers. Washington cannot agree to a long-term solution that will serve the best interests of students and taxpayers. I think we need to keep working to do that.
It was pointed out that the Senate won't act. Well, for many of us in this body, that's not a lot of news, but July 1 is still July 1, and there is an incentive over there, and I believe the Senate must take action. I look forward to working with them to achieve the long-term solution that I think that we all need to see.
It was pointed out that we have a variable rate. The President has a variable rate but then his fixes. Certainly, under our law, when you graduate, if you're in a low-interest environment, you can consolidate those loans and fix them for the duration of however long you're taking to pay off those loans. If it's in a high interest rate environment, you may not want to do that. In the other plan, you've already got a fixed rate.
We believe we can work together. The only way we can continue to work together to solve this is to pass this legislation. Pass it today. I urge my colleagues to reject the failed status quo and to embrace a responsible long-term solution on behalf of students, families, and hardworking American taxpayers. I urge my colleagues to support the Smarter Solutions for Students Act.
I yield back the balance of my time.
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Mr. KLINE. Mr. Speaker, we're trying to get to a long-term solution on how student loan interest rates are set. I believe the process for that is to pass the underlying legislation here, talk to our Senate colleagues, get them to act so that we can come together and come to a long-term solution.
The gentlelady's motion puts Washington squarely back in the middle of setting student loan interest rates. It's the wrong thing to do. I urge my colleagues to vote ``no'' on the motion and vote ``yes'' on the underlying bill.
With that, I yield back the balance of my time.
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