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Stop Student Loan Interest Rates From Doubling

The Chair recognizes the gentleman from Connecticut (Mr. Courtney) for 5 minutes.

Rep. Joe Courtney

legislator photo

Mr. Speaker, 2011 marked an unfortunate milestone in our country's financial picture when, for the first time in American history, student loan debt actually exceeded credit card debt, which again by itself is just a huge statement in terms of the challenges that families, middle class families and working families, are facing today in terms of trying to deal with the cost of higher education.

The value of a higher education degree or post-high school degree, which is sometimes debated in the media, still I believe is indisputable, and the statistics certainly demonstrate that. At a time when our national unemployment rate is 8.3 percent, if you drill down deeper you'll learn that for those with less than a high school degree, the unemployment rate is 16.5 percent. Those with a high school degree, it's 10.7 percent. Those with some college is 8.5 percent, and those with a bachelor's degree or higher is 4.5 percent.

So the stakes could not be higher for young people all across our country that we must deal with the mounting cost of higher education and provide mechanisms for them and their families to actually finance it and pay for it.

In 2007, the Democratic-controlled Congress passed the College Cost Reduction Act, which was a terrific measure that cut the interest rates for the Stafford Student Loan program, the federally subsidized student loan program which provided some stability and affordability for middle class families, from 6.8 percent down to 3.4 percent. In addition, we unfroze the Pell Grant program, which is the workhorse of paying for college education, all of it paid for by eliminating wasteful subsidies to banks. That measure has a sunset this July. The interest rate reduction of the College Cost Reduction Act will in fact expire on July 1 unless Congress acts.

President Obama in his State of the Union Address a few nights ago raised this issue before all of us in the House and Senate when he said: ``When kids do graduate, the most daunting challenge can be the cost of college. At a time when Americans owe more in tuition debt than credit card debt, this Congress needs to stop the interest rates on student loans from doubling in July.''

Mr. Speaker, shortly after his address, myself and Congressman Peters from Michigan introduced H.R. 3826, which is a measure that would extend the 3.4 percent, the lower interest rates on the Stafford Student Loan program, and in just a few days we have accumulated 55 cosponsors to this measure.

Again, the math is crystal clear: If we do not act, if we do not maintain those interest rates at 3.4 percent, if Congress does nothing, the U.S. Public Interest Research Group has calculated that for those students who take out the maximum $23,000 in subsidized student loans, their interest payments will increase by $5,200 over a 10-year repayment period and $11,300 over a 20-year repayment period.

Now, if you told middle class families that if Congress doesn't act on a measure like this, your out-of-pocket costs are going to go up $5,200 for taxes, there would be a huge hue and cry about the fact that Congress must not let that happen. Well, that's exactly the same situation we face today with the Stafford Student Loan program. Again, we know from the passage of the College Cost Reduction Act that this is something that this body is capable of doing.

This past weekend I was with a family whose son is now in his junior year, and as an undergraduate has almost a perfect 4.0 grade average, very motivated to go into the health care field, and he has already accumulated $100,000 in student loan debt. We as a Nation must address this problem.

The National College Board, which tracks graduation rates internationally, reminds us that back in the 1980s, the U.S. was number one in the world in terms of graduation rates. We have fallen to number 12 according to the National College Board, and the biggest reason that students are not finishing college is because of affordability and cost. Again, the President laid out the challenge to the Congress in his State of the Union Address. We must not allow Stafford Student Loan interest rates to double on July 1.

We should pass H.R. 3826. We should get that to the President so that colleges and universities can help families plan their tuition payments for the upcoming year and not allow this country to go backwards in terms of making sure that we have the finest workforce in the world.