Rep. George Miller Statement on President Obama’s Speech on Student Loans
WASHINGTON – Rep. George Miller (D-Calif.), the senior Democratic member of the House Education and the Workforce Committee, issued the following statement today after President Obama’s speech on urging Congress to come together in order to prevent the doubling of student loan interest rates for 7 million borrowers on July 1.
“I applaud President Obama for continuing to focus on making college more affordable and accessible for all Americans. At a time of rising college costs, saddling students with more debt at the time when they are trying to get ahead is not a smart approach for families or the economy. Congress needs to work together to stop the doubling of interest rates in July and work on a long-term solution for the student loan program that will ensure that we don’t add additional debt on Americans seeking a higher education.
“President Obama made the differences on his and the House Republican plans to address student loan debt absolutely clear today. It is indisputable that students and families will face dramatically increased debt under the House Republican plan, which is unacceptable to me, Democrats and President Obama.”
Background on the Republican student loan bill:
The GOP student loan bill is different from President Obama’s proposal in key ways. First, the GOP bill sets interest rates higher than the Obama plan – a 169 percent more under the GOP plan for subsidized Stafford loans (0.93% above the 10-year Treasury rate vs. 2.50% above the 10-year Treasury rate). In the first year, estimates show that interest rates under the Obama proposal for the neediest students would be 2.74% and 4.31% under the GOP proposal. However, interest rates under H.R. 1911 will change every year—like an adjustable rate mortgage. So, students will be lured into a teaser rate that only lasts only one year. Not so in the Obama proposal: The loan rate you sign up for is good for the life of the loan. Read a summary of the differences from Brookings.
The GOP student loan bill will make college more expensive. This is the judgment of the independent, nonpartisan Congressional Research Service (CRS). They estimate that students and parents will pay more for their student loans under the Republican plan – more even if interest rates were to double on July 1st. In other words, borrowers would be better off if Congress does nothing. Read the CRS report.
The GOP student loan bill puts students in an adjustable-rate-mortgage-like loan. As mentioned before, interest rates on loans will be reset every year. So, the interest rate on a loan taken out next year by a freshman may start off low, but she doesn’t get to keep that interest rate for the life of the loan. It will change every year just like an adjustable rate mortgage.
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