Statement of Senator Patrick Leahy On the “Bipartisan Student Loan Certainty Act”
More than three weeks have passed since interest rates on subsidized Stafford loans have doubled for students next year. Unfortunately, this rate increase has taken effect despite numerous attempts by the Senate to extend the lower rates while we debate a comprehensive solution to the high cost of college, including student loan interest rates. Few if any bills that make their arduous way through the legislative process are perfect, but the legislation we are considering today is, in too many ways, too imperfect. Even after our attempts to win approval of better options, this legislation, in its final form, does not offer enough to protect our future students from needlessly paying higher interest rates.
Education is a path out of poverty, a road to personal growth, and an access ramp to professional accomplishment and economic security. No student should be denied the benefits of a college education because of the cost, but unfortunately that is happening all too often. In recent years, average college tuition rates have been increasing faster than inflation and outpacing student financial aid. Tuition rates today are going beyond the ability of most families to pay. As a result, students and their parents take on significant student loan debt in order to have the opportunity at a college education.
I believe that the federal government has an obligation to support these students by subsidizing loans for the lowest income students and offering programs like Pell Grants to help students who never thought they could afford college. While the bill lowers interest rates for 11 million students in the near term, students and their parents by as soon as 2015 will likely pay higher interest than they pay under current law. Debt from student loans is climbing to new heights and outstanding student loan debt in the United States has reached nearly $1 trillion.
This debate has included consideration of two amendments that I am pleased to cosponsor that would greatly improve the underlying legislation. Senators Reed and Warren filed an amendment to reduce the caps on interest rates to current levels, ensuring that students are no worse off under this legislation than they are today. We also have considered an amendment by Senator Sanders, which will sunset this agreement after two years, ensuring that Congress continues the important conversation at how best to reduce college costs for students and their families. I very much hoped that these amendments could have been adopted.
This legislation is a mere patch on a much larger problem. We must have a comprehensive debate at lowering college costs through the Higher Education Act reauthorization this fall. As part of that debate I dearly hope we address the abuses of for-profit colleges and the raw deal they are giving to far too many students. While these schools are turning a profit and filling the airwaves with paid advertising, many of their students are defaulting on their federal loans because these schools by and large do not offer an adequate education that prepares students for the working world. Some of these schools are swindling our students, and we cannot adequately address college affordability without better regulating for-profit schools.
This legislation is not what I would have drafted. Under the new student loan bill, the federal government will make an additional $715 million in profits over the next decade, and all of the profit is coming from the pocketbooks of students and their families. While I am pleased the legislation includes a GAO study within four months to help us better understand the costs to the government of running the student loan program, so that we can better set appropriate student loan interest rates that do not generate revenue for the federal government, it does not go far enough to protect our students.
This conversation is not completed. The challenge and the obligation of making college affordable certainly remains. We have a responsibility to families across America to not only keep student loan interest rates low in the years ahead, as they plan their finances and manage their households, but to make fundamental reforms to help students and their families manage college costs. I am counting on that debate, and I know America’s students are, too.
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David Carle: 202-224-3693
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