Students at colleges and universities throughout the Sixth District and the rest of the country depend on student loans to finance their education each year. In fact, nearly 12 million students in the United States borrow annually to help cover education costs. But without congressional action, on July 1st interest rates for federally subsidized student loans are set to double from 3.4 percent to 6.8 percent. The lack of a permanent fix to lock in an interest rate structure has once again brought us to the brink of this deadline. College students and families need a real solution that will end the confusion and uncertainty surrounding student loan interest rates.
In May, the House passed the Smarter Solutions for Students Act, which moves federal student loans originating after July 1, 2013, to a market-based interest rate. I supported this legislation because it removes politicians from the student loan equation and provides peace of mind that student loan repayments will be stable into the future. Under the Smarter Solutions for Students Act, student loan interest rates would reset once a year and move with the free market, based on the 10-year Treasury note. There would also be a cap put in place to protect borrowers in high interest rate environments.
College students have enough to focus on during the school year without worrying about whether or not lawmakers will act to keep interest rates low. The Smarter Solutions for Students Act is all about giving students and their families certainty that their investment in higher education and a brighter future will not be thwarted by student loan interest rates that are subject to political whims. This plan keeps costs at reasonable rates for students and is a fiscally prudent investment by the government that works for students, families, and taxpayers.
While the House passed a bipartisan student loan fix weeks ago, unfortunately, the Democrat-controlled Senate has failed to produce a plan to prevent interest rates from doubling. College should be accessible and affordable for those who wish to pursue that path. However, the Senate's inaction and failure to compromise is putting this in jeopardy. The House-passed plan is similar to what is already outlined in the president's fiscal year 2014 budget. There is no reason why the Senate and White House cannot come to the table and ensure this bill becomes law.
Approximately 70 percent of the class of 2013 graduated with an average of $35,200 dollars in student loan debt. If we do not implement a permanent fix to the interest rate problem, we will continue to see costs of higher education rise at the expense of today's students. As the congressional clock ticks toward this deadline, I urge the Senate Democrats to end this stalemate and work with us to help protect students.