ACE and 14 other higher education associations have released a statement of key principles for lawmakers to consider as they craft legislation to address the looming interest rate increase for subsidized student loans, which is slated to double from 3.4 percent to 6.8 percent July 1.
The groups sent the statement today to Reps. John Kline (R-MN) and Virginia Foxx (R-NC) of the House Education and Workforce Committee, who introduced the Smarter Solutions for Students Act (H.R. 1911) May 9, along with a letter summarizing the groups’ response to the measure.
The principles include:
- Any changes need to reflect the fact that federal student loan programs were created to enable students to access postsecondary education and should be aimed at ensuring that deserving students, regardless of means, can afford to attend college.
- Federal student loans should be made at the lowest possible cost to students, while ensuring the continued reliable operation of the programs.
- Any short-term fix to the expiration of the 3.4 percent interest rate for subsidized Stafford loans cannot preclude a more comprehensive, long-term approach to program reform.
- Students should not be forced to surrender long-term benefits in exchange for short-term gains.
- Changes to aid programs or existing benefits should only be made for the purposes of strengthening the system for all student loan borrowers. Eliminating benefits or increasing costs for one set of students in order to increase aid for another set of students simply shifts the burden.
- In order to keep the costs of borrowing correlated to the economic conditions that borrowers face, student loan interest rates should be tied to market rates.
A number of bills have been proposed in the Senate to address the pending interest rate deadline, including the Student Loan Affordability Act of 2013 (S. 953), introduced by Tom Harkin (D-IA), chair of the Senate Health, Education, Labor, and Pensions (HELP) Committee, Jack Reed (D-RI) and Majority Leader Harry Reid (D-NV). That measure would freeze student loan interest rates for two years while Congress works on a long-term solution.
Other proposals have been offered by Lamar Alexander (R-TN), Richard Burr (R-NC) and Tom Coburn (R-OK); Elizabeth Warren (D-MA), and Reed and Dick Durbin (D-IL).