Rep. Tom Reed Votes to Lower Student Loan Interest Rates
Today, Rep. Tom Reed and the House voted to approve the Smarter Solutions for Students Act, legislation to lower student loan interest rates on a long-term basis, protecting students and their families from the scheduled July 1, 2013 student loan cliff where rates would double to 6.8 percent.
“Short-term, one-year patches are not fair to our students and leave them waiting on Congress each year to see if it will act to prevent a rate increase,” Reed said. “Today’s bill prevents students from seeing their interest rates jump to 6.8 percent, which is mandated by law if Congress does not act. This is the long-term solution local colleges and students have been advocating for, lowering rates for federal loan recipients. I care about protecting our students on a long-term basis.”
Reed has been gathering feedback from all area colleges and universities over the past year since Congress approved a one-year patch last summer. Reed hosted financial aid officers from colleges last summer, met with students at Cornell University last month to discuss student loans and solicited feedback from college presidents and financial aid offices on today’s bill.
“We received overwhelming support for the legislation that passed the House today supporting efforts to link student loan interest rates to the free market with area schools saying this would mean over 70 percent of the loans students receive will see a lower interest rate,” Reed continued. “Most importantly, we protect students from seeing their interest rates double to 6.8 percent on July 1st while providing a long-term solution that avoids a yearly fight over loan rates.”
President Obama included a similar proposal to move to a market-based interest rate in his 2014 Budget. Congressional Democrats, including House Education and the Workforce Committee Ranking Member George Miller, also support returning interest rates to the free market.
“The consensus is clear: we should not be subjecting students to Washington politics. That’s not fair to our students. Instead, let’s get politicians and politics out of the business of setting student loan interest rates. Making our students wait each year to see if Congress will act in time to prevent a rate spike means students don’t have the ability to plan. It’s time to listen to our students and college representatives to return federal student loan interest rates back to the free market.”
Returning loan rates to the free market means students can take advantage of lower rates and are protected with a rate cap. Additionally, borrowers have the ability to consolidate their loans after graduation, allowing them to take advantage of, and lock in, low interest rates for the life of their loan.