Bipartisan Student Loan Certainty Act of 2013by Representative Joe Courtney
Posted on 2013-07-31
COURTNEY. Mr. Speaker, I, too, rise in support of the Student
Loan Certainty Act and again want to emphasize the fact that, compared
to the product that came out of this Chamber on May 23 that the
majority passed on a partisan, party-line vote, on which the White
House issued a veto threat, the final bill that's before us here today
is a far superior piece of legislation that protects students.
Again, as Mr. Miller said, the numbers don't lie. The bill that the Republicans passed on May 23 had a 4.3 percent interest rate, which was a teaser rate. The bill that's being passed here today is 3.86 percent, and over time, that nets about $5,000 of additional savings for students. That's real money, and that certainly is something that's worth the wait.
But what I want to point out is that there is actually, in my opinion, a more fundamental difference which is so critical for borrowers, which is that this piece of legislation will fix the rate at time of origination. In other words, when students take on these 10- year notes, which is what Stafford student loans are, the rate is fixed at the time the note is written.
The bill that came out on May 23 was a floating variable rate product which would not be set until the time that students commenced payment. Some students take Stafford loans out over a period of 5 and 6 years, so the rates that they were touting back on May 23 were an illusion. They were not what the rate was that the student actually was going to be paying.
And again, for this country, which went through the trauma of the subprime mortgage variable rate fiasco, this is a critical difference which provides greater protection for the borrower.
If you go online today, a 30-year mortgage for a house is about 4 percent, for an auto loan it's about 3.8 percent. They are fixed loans if you took those loans out today. And that's exactly what this compromise creates is that there will be real borrower certainty and protection, unlike the bill that recklessly, and on a partisan, party- line basis, flew out of this Chamber on May 23.
This is a better deal for America's students. It's why, again, the process that we went through was worth it. And again, it's certainly worth people's support.
At the end of the day, though, let's remember, students are still paying [[Page H5217]] into the deficit of this country. The Congressional Budget Office has told us over 10 years, $184 billion of revenue is going to be generated through this program towards the deficit.
We need to change that. That's not the purpose of the Stafford student loan program. When Senator Stafford from Vermont passed it many years ago, it was about providing an affordable system of access for higher education, not a cash windfall for the coffers of the government.
And that's why we have more work to do. That's why we need to pass a Higher Education Authorization Act which, again, balances these priorities in the right direction for students, not for government coffers. And again, this legislation gives us the time to address that issue and come out with an even better program for students which, again, is good for them and good for our country, to make sure that we have a workforce which is ready for the challenges of the future.