House Republican Policy Committee Chairman James Lankford (R-OK) joined his colleagues today in support of H.R. 1911, the Smarter Solutions for Students Act.
"I am glad the President and House Republicans are able to find common ground on a long-term, market-based approach for federal student loans through proposals like the Smarter Solutions for Students Act," said Lankford.
"House Republicans are committed to making life work for students, families and the American taxpayer. A debt-free future is the best way forward for students. However, students should have certainty and clarity when they take on education debt, so they can focus on final exams, graduation and their future job and spend less time worrying about how they will afford their student loan payments. Since unemployment for college graduates remains significantly higher than the national average, student loan debt represents a major hurdle for achieving financial stability and prosperity. There is a way to help ease the financial burden on students while minimizing its impact on the American taxpayer."
Under the legislation student loan interest rates would reset each year and fluctuate with the free market. Interest rates would be set using the following formula:
Stafford loans (subsidized and unsubsidized): 10-year Treasury note plus 2.5 percent, capped at 8.5 percent.
PLUS loans (graduate and parent): 10 -year Treasury note plus 4.5 percent, capped at 10.5 percent
According to the Congressional Budget Office (CBO), the bill will save the federal government $995 million over five years and $3.7 billion over 10 years. This proposal is consistent with a similar plan proposed by President Obama in his fiscal year 2014 budget request.
"Earning a quality education is a significant part of the American dream. I will continue to stand by students and their families while enabling our academic institutions to continue pioneering technology, innovation and keeping American workers competitive in the global market," concluded Lankford.