House Passes Bipartisan Student Loan Legislation Saving Borrowers Billions
WASHINGTON – The U.S. House of Representatives today approved bipartisan legislation that would reverse the July 1 student loan interest rate hike. By a vote of 392 to 31, the House passed the Bipartisan Student Loan Certainty Act, bipartisan legislation that the Senate approved last week, which provides students and parents $25 billion in student debt relief through lower interest payments over the next several years compared to current law. The bill now goes to President Obama for his signature.
“This bill provides American college students immediate debt relief on upcoming student loans,” said Rep. George Miller (D-Calif.), the senior Democratic member on the House Education and the Workforce Committee. “Families battered by the recent recession should have received this relief over a month ago. Thanks to bipartisan negotiations in the Senate, the original House Republican bill, which was so devastating to students that it was worse than doing nothing, has been rejected and replaced with something that actually helps students.”
"Enactment of the Senate bill in no way means our work is done,” continued Rep. Miller. “This bill helps reduce costs to students and families, but it does not solve the long-term student loan debt crisis. It does not eliminate the significant profits currently collected by the federal government from student loans. Accordingly, I remain committed to keeping interest rates down and to addressing college cost as a whole.”
In May, the House passed the GOP’s H.R. 1911 would increase students total debt burden by nearly $4 billion, and a Congressional Research Service (CRS) analysis shows that the proposal is even worse for students than the 6.8 percent rate that took effect on July 1 for subsidized Stafford loans.
“This compromise was a long time coming, but I am glad that Congress has acted to reverse the automatic hike in federal student loan interest rates before the start of the school year,” Congressman Joe Courtney (D-Conn.) said. “With the passage of this bill, undergraduate students and families who are getting ready to head back to school in just a few weeks will have interest rates on their Stafford student loans reduced from 6.8 percent to 3.86 percent, saving them nearly $1,500 in interest over the life of the loan. This bill reduces student loan interest rates immediately and in the near term, acting as a bridge to the reauthorization of the Higher Education Act, in which we can address college affordability comprehensively. Unless we can begin to rein in the cost of college, lower interest rates will not be sufficient to make higher education affordable for middle class families.”
By contrast, the bipartisan legislation passed by the House today, originally introduced as S.1334 but passed as an amendment to H.R. 1911, benefits students and families in a number of ways including:
- Provides Students $25 Billion in Debt Relief Over the Next Five Years. Under the bipartisan legislation, college students and their families would save $25 billion in lower interest costs from 2013-2018, compared to current interest rates. By contrast, the original House passed Republican H.R. 1911 costs students $1 billion over the same period of time.
- Locks in Interest Rates for the Life of the Loan. The bipartisan legislation allows students to lock in today’s historic low interest rates for the life of the loan and ‘know what they owe’ before signing on the bottom line. By contrast, the House passed Republican H.R. 1911 provides a teaser rate today but balloons in future years on the same loans as interest rates rise, leaving students guessing what they will owe.
- Provides a Reasonable Cap to Protect Students from Rising Interest Rates. Because Senate Republicans finally dropped their opposition to caps, the bipartisan legislation now has interest rate caps that allow students to fully benefit when interest rates are very low, but protects them when interest rates go up sharply by capping them at 8.25 percent. The bipartisan bill has lower interest rate caps for undergraduates compared to the original House passed Republican H.R. 1911 (8.25 percent versus 8.5 percent).
The bipartisan legislation is supported by a coalition of the nation’s leading student, civil rights, higher education, and financial aid organizations.
For more information on the Bipartisan Student Loan Certainty Act, click here.