Facts on H.R. 1911, the GOP Bill to Make College More Expensive
House Republicans have introduced a bill to rewrite the nation’s student loan programs. It is exactly the wrong solution for the nation’s students and families.
Students and families are finding it more and more difficult to afford a college education and are turning to student loans to make up the difference. Especially during a tight economy, it pays to get a college education. It is in the nation’s long-term economic interest to ensure that qualified students are able to afford and access institutions of higher learning.
Unfortunately, Congressional Republicans’ proposal doesn’t fit the bill and will only pile on more debt on students already at record levels, making college more expensive.
Here’s why the Republican bill is not a smart solution:
H.R. 1911 Makes Attending College More Expensive for Students and Families. According to the Congressional Budget Office (CBO), increased interest rates for student loans will cost students almost $4 billion in additional loan interest charges relative to current law.
H.R. 1911 Further Deepens the College Debt Crisis, Already Topping $1.1 trillion. Saddling students with higher interest rates means the GOP is adding billions to the crushing debt already carried by college students and their families.
H.R. 1911's Widely Variable Interest Rate Scheme is a Classic Bait-and-Switch. Under the Republican bill, borrowers today won’t be able to take advantage of the historic low rates. For instance, the very same Federal student loan taken out next year will be reset every year. By the time next year’s freshmen graduate and start repaying their loans in 2017, the interest rate on that loan taken out during their freshman year is projected to more than double beyond today’s current rate for subsidized Stafford loans.
CBO Projects the Bill Will Force Students into Loans with Skyrocketing Interest Rates. According to estimates provided by CBO, federal student interest rates will be higher than current fixed rates for millions of borrowers seven of the next ten years.
Democrats Support both a Short Term Fix and Long Term Solutions. The Democratic proposal continues to allow college students to benefit from historically low interest rates by freezing the low 3.4 percent rate on subsidized loans for the next two years and keeping other education loan rates stable.
In addition, Democrats support long-term solutions to student loan interest rates as part of the upcoming Higher Education Act’s reauthorization when policymakers can tackle student loans as part of comprehensive efforts to address college costs and affordability.
CRS found that student and families would pay higher interest costs under the Republican proposal than they do today – even if interest rates doubled as scheduled for the neediest students in July. The figures below are based on a standard repayment period of ten years
What they are saying about the H.R. 1911:
While appearing to offer low rates for new borrowers, the bill does not make federal loans more affordable. In fact, it makes them much more costly for students, with variable rates on undergraduate loansthat are projected to rise nearly three percentage points(to 7.36%) by the time this fall’s freshmen graduate from college and make their first loan payment.
Moreover, a low-income borrower enrolling in college next year would pay less on her student loan under current law than under the Kline plan even if rates are allowed to double, because her rate would rise again by the time she graduates. Students, their families, and workers need to see Congress making college more affordable, not less.
H.R. 1911 changes the way in which we set student loan rates, but does not actually keep costs low for students...Compared to the current fixed rates that borrowers are guaranteed under current law, the caps in H.R.1911 will not provide protection or relief for the neediest students and families who continue to struggle paying for college...Finally, we are deeply concerned that this plan permanently incorporates significant revenues generated from student loan borrowers into a system that does not funnel this money back into education. Federal student loans are a public good, so there is no justification for charging students high interest to generate revenue. That H.R. 1911 skims $3.7 billion in revenue from the program to apply toward deficit reduction adds insult to injury. We should not continue to cut access to address the nation’s deficit; we should instead be investing in our country’s future workforce.