Alexander: Democratic Student Loan Bill “Leaves More Than 7 Million Middle-Income Students Twisting in the Wind, Paying Double the Rates They Should”

WASHINGTON, July 9—The senior Republican on the U.S. Senate education committee today in a speech on the Senate floor (Video HERE) called on Senate Democrats to support a proposal to lower student loan rates for all student borrowers, rather than the Democratic proposal scheduled for a vote tomorrow that will lower rates only on subsidized Stafford loans for a year.

Sen. Lamar Alexander (R-Tenn.) said: “The only proposal that we're voting on tomorrow appears to be one that will leave [more than 7] million middle-income college students twisting in the wind paying about twice as much in interest rates as they should be. At the same time we have a proposal that is based upon a recommendation by President Obama, that is like legislation already passed by the Republican House of Representatives, that is supported by an independent and two Democratic senators and three Republican senators, that would lower student loan interest rates on every single one of the 18 million new loans that would be taken out next year and cut nearly in half the interest rates on loans for undergraduate students.”

Alexander is a cosponsor of the Bipartisan Student Loan Certainty Act, a compromise bipartisan solution introduced by Senators Joe Manchin (D-W.Va.), Richard Burr (R-N.C.), Tom Coburn (R-Okla.), Alexander, Angus King (I-Maine), and Tom Carper (D-Del.) that provides a long-term fix for all student loans while preventing rates from doubling on subsidized loans on July 1^st. This bill saves students $8.8 billion in 2013 and over $36 billion in the next four years by giving students access to the lowest rates possible, allowing them to take advantage of low borrowing costs when everyone else in the economy can borrow cheaply. The bill strengthens borrower protections by reinforcing the 8.25% interest rate cap on consolidation.

Alexander said today: “The student loan issue is becoming like what we call the ‘doc fix,’ where Congress for political reasons every year rushes around and makes a temporary patch. There's no need to do that here…If we have a solution, we ought to adopt it.

“I would ask my friends on the Democratic side to look at what the president has proposed and the reason behind it. It was in his budget. Look at what the House of Representatives has done. They've actually passed a bill that lowers rates. And then look at the proposal by Senators Manchin, Carper, and King, and Coburn, Burr, and me on this side. What our proposal would do is provide a long-term solution: if you are an undergraduate student at the University of Tennessee, instead of your rate being 6.8 percent, it would be 3.66 percent. The Democratic proposal, I repeat, does nothing for [more than 7] million middle-income students who are going to be paying 6.8 percent when they should be paying, if they're undergraduates, 3.66 percent under our proposal. That's half as much. There is no need for that.”

In a response to remarks by Sen. Patty Murray (D-Wash.), Alexander said (Video HERE): “What is good about a short-term political fix that makes middle-income students and graduate students pay more—hundreds of millions of dollars more over the next ten years? What's good about that? All it does is provide an opportunity to make a well-rehearsed political speech about student loans. We all want to encourage students to go to college. We're looking for a way to give them some predictability and some certainty so that a student doesn't have to worry when they graduate from high school in Tennessee, where I went, that Congress isn't going to get its job done and all they're going to do is stand up and make political speeches that have nothing to do with the issue.”

He continued: “As far as balancing the budget on the back of students, the only people around here doing that have been the Democrats when they passed the health care law. They put in there a takeover of the federal student loan program, and according to the Congressional Budget Office, they had an amount of savings, $55 billion, and they used part of it to reduce the debt. So the CBO says these are savings because you took over student loans and the Democrats said we'll use it to reduce the debt. We'll use it on the Pell Grant program. And they used it to help pay for the health care law. Every single year for the next five or six years, students are being overcharged to help pay for the health care law. If we want to get into a big political discussion about who's overcharging students in order to reduce the deficit or pay for the health care law, we could have that. But that’s not what we want to do. We want a result.”

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