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John K.
Republican MN 2

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  • Bipartisan Student Loan Certainty Act of 2013

    by Representative John Kline

    Posted on 2013-07-31

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    KLINE. Mr. Speaker, I move to suspend the rules and concur in the Senate amendment to the bill (H.R. 1911) to amend the Higher Education Act of 1965 to establish interest rates for new loans made on or after July 1, 2013, to direct the Secretary of Education to convene the Advisory Committee on Improving Postsecondary Education Data to conduct a study on improvements to postsecondary education transparency at the Federal level, and for other purposes.



    The Clerk read the title of the bill.

    The text of the Senate amendment is as follows: Senate amendment: Strike all after the first word and insert the following: 1. SHORT TITLE.

    This Act may be cited as the ``Bipartisan Student Loan Certainty Act of 2013''.

    SEC. 2. INTEREST RATES.

    (a) Interest Rates.--Section 455(b) of the Higher Education Act of 1965 (20 U.S.C. 1087e(b)) is amended-- (1) in paragraph (7)-- (A) in the paragraph heading, by inserting ``and before july 1, 2013'' after ``on or after july 1, 2006''; (B) in subparagraph (A), by inserting ``and before July 1, 2013,'' after ``on or after July 1, 2006,''; (C) in subparagraph (B), by inserting ``and before July 1, 2013,'' after ``on or after July 1, 2006,''; and (D) in subparagraph (C), by inserting ``and before July 1, 2013,'' after ``on or after July 1, 2006,''; (2) by redesignating paragraphs (8) and (9) as paragraphs (9) and (10), respectively; and (3) by inserting after paragraph (7) the following: ``(8) Interest rate provisions for new loans on or after july 1, 2013.-- ``(A) Rates for undergraduate fdsl and fdusl.-- Notwithstanding the preceding paragraphs of this subsection, for Federal Direct Stafford Loans and Federal Direct Unsubsidized Stafford Loans issued to undergraduate students, for which the first disbursement is made on or after July 1, 2013, the applicable rate of interest shall, for loans disbursed during any 12-month period beginning on July 1 and ending on June 30, be determined on the preceding June 1 and be equal to the lesser of-- ``(i) a rate equal to the high yield of the 10-year Treasury note auctioned at the final auction held prior to such June 1 plus 2.05 percent; or ``(ii) 8.25 percent.

    ``(B) Rates for graduate and professional fdusl.-- Notwithstanding the preceding paragraphs of this subsection, for Federal Direct Unsubsidized Stafford Loans issued to graduate or professional students, for which the first disbursement is made on or after July 1, 2013, the applicable rate of interest shall, for loans disbursed during any 12- month period beginning on July 1 and ending on June 30, be determined on the preceding June 1 and be equal to the lesser of-- ``(i) a rate equal to the high yield of the 10-year Treasury note auctioned at the final auction held prior to such June 1 plus 3.6 percent; or [[Page H5215]] ``(ii) 9.5 percent.

    ``(C) PLUS loans.--Notwithstanding the preceding paragraphs of this subsection, for Federal Direct PLUS Loans, for which the first disbursement is made on or after July 1, 2013, the applicable rate of interest shall, for loans disbursed during any 12-month period beginning on July 1 and ending on June 30, be determined on the preceding June 1 and be equal to the lesser of-- ``(i) a rate equal to the high yield of the 10-year Treasury note auctioned at the final auction held prior to such June 1 plus 4.6 percent; or ``(ii) 10.5 percent.

    ``(D) Consolidation loans.--Notwithstanding the preceding paragraphs of this subsection, any Federal Direct Consolidation Loan for which the application is received on or after July 1, 2013, shall bear interest at an annual rate on the unpaid principal balance of the loan that is equal to the weighted average of the interest rates on the loans consolidated, rounded to the nearest higher one-eighth of one percent.

    ``(E) Consultation.--The Secretary shall determine the applicable rate of interest under this paragraph after consultation with the Secretary of the Treasury and shall publish such rate in the Federal Register as soon as practicable after the date of determination.

    ``(F) Rate.--The applicable rate of interest determined under this paragraph for a Federal Direct Stafford Loan, a Federal Direct Unsubsidized Stafford Loan, or a Federal Direct PLUS Loan shall be fixed for the period of the loan.''.

    (b) Effective Date.--The amendments made by subsection (a) shall take effect as if enacted on July 1, 2013.

    SEC. 3. BUDGETARY EFFECTS.

    (a) Paygo Scorecard.--The budgetary effects of this Act shall not be entered on either PAYGO scorecard maintained pursuant to section 4(d) of the Statutory Pay- As-You-Go Act of 2010.

    (b) Senate Paygo Scorecard.--The budgetary effects of this Act shall not be entered on any PAYGO scorecard maintained for purposes of section 201 of S. Con. Res. 21 (110th Congress).

    SEC. 4. STUDY ON THE ACTUAL COST OF ADMINISTERING THE FEDERAL STUDENT LOAN PROGRAMS.

    Not later than 120 days after the date of enactment of this Act, the Comptroller General of the United States shall-- (1) complete a study that determines the actual cost to the Federal Government of carrying out the Federal student loan programs authorized under title IV of the Higher Education Act of 1965 (20 U.S.C. 1070 et seq.), which shall-- (A) provide estimates relying on accurate information based on past, current, and projected data as to the appropriate index and mark-up rate for the Federal Government's cost of borrowing that would allow the Federal Government to effectively administer and cover the cost of the Federal student programs authorized under title IV of the Higher Education Act of 1965 (20 U.S.C. 1070 et seq.) under the scoring rules outlined in the Federal Credit Reform Act of 1990 (2 U.S.C. 661 et seq.); (B) provide the information described in this section in a way that separates out administrative costs, interest rate, and other loan terms and conditions; and (C) set forth clear recommendations to the relevant authorizing committees of Congress as to how future legislation can incorporate the results of the study described in this section to allow for the administration of the Federal student loan programs authorized under title IV of the Higher Education Act of 1965 (20 U.S.C. 1070 et seq.) without generating any additional revenue to the Federal Government except revenue that is needed to carry out such programs; and (2) prepare and submit a report to the Committee on Health, Education, Labor, and Pensions of the Senate and the Committee on Education and the Workforce of the House of Representatives setting forth the conclusions of the study described in this section in such a manner that the recommendations included in the report can inform future reauthorizations of the Higher Education Act of 1965 (20 U.S.C. 1001 et seq.).

    The SPEAKER pro tempore. Pursuant to the rule, the gentleman from Minnesota (Mr. Kline) and the gentleman from California (Mr. George Miller) each will control 20 minutes.

    The Chair recognizes the gentleman from Minnesota.

    General Leave Mr. KLINE. Mr. Speaker, I ask unanimous consent that all Members may have 5 legislative days in which to revise and extend their remarks on H.R. 1911.

    The SPEAKER pro tempore. Is there objection to the request of the gentleman from Minnesota? There was no objection.

    {time} 1615 Mr. KLINE. Mr. Speaker, I yield myself as much time as I may consume.

    I rise today in strong support of the Bipartisan Student Loan Certainty Act, also known as the Smarter Solutions for Students Act.

    After many weeks of delay, I'm pleased we finally have a bipartisan agreement to address the student loan interest rate problem. My colleagues and I have been fighting for months for a long-term, market- based solution that will serve students and taxpayers, and the legislation before us today will do just that.

    As you can see in this chart, much like the Smarter Solutions for Students Act approved by the House back in May, the Bipartisan Student Loan Certainty Act will tie student loan interest rates to the market, taking away the uncertainty that comes with allowing Congress to arbitrarily set rates.

    Similarly, both bills provide a permanent fix to the interest rate problem, granting students the certainty they need to make smart, fiscally responsible investments in their education.

    And most importantly, this legislation, like its predecessor, doesn't unfairly penalize taxpayers. Unlike some half-baked proposals that would put taxpayers on the hook for billions of dollars to pay for artificially low student loan interest rates, both the House-passed Smarter Solutions for Students Act and the Bipartisan Student Loan Certainty Act will generate a small amount of savings over 10 years.

    Reports confirm the similarities between the House bill and its Senate companion. MSNBC has said the House bill is ``very similar'' to the Senate proposal. The Minneapolis Star Tribune recently noted the Senate compromise ``closely resembles'' the House-passed Smarter Solutions for Students Act, and the Associated Press called the differences between the two proposals ``relatively small.'' While I'm happy with the legislation we will consider today, I'm disappointed it took us so long to get to this point. Students and their families got roped into an all-too-tumultuous debate and were forced to deal with the fallout when Congress was unable to reach an agreement to prevent subsidized Stafford loan interest rates from doubling on July 1.

    By getting politicians out of the business of setting student loan interest rates, the measure we consider today will protect students from future uncertainty. I applaud my colleagues on the other side of the aisle for finally recognizing this long-term, market-based proposal for what it is: a win for students and taxpayers.

    Mr. Speaker, I strongly urge my colleagues to join me in supporting H.R. 1911.

    I reserve the balance of my time.

    Mr. GEORGE MILLER of California. Mr. Speaker, I yield myself 4 minutes.

    Mr. Speaker, I rise in support of the Bipartisan Student Loan Certainty Act. It has been nearly a month since interest rates on student loans were allowed to double on millions of our neediest students, but thanks to the bipartisan negotiations in the Senate, we now have a solution that provides real relief. And I want to thank Senator Durbin, Senator Harkin, Senator Manchin, and Senator King for all of their work on this effort.

    Thanks to this legislation, over the next 5 years, borrowers across the country will save $25 billion in interest payments. In my home State of California, this bill will cut the cost of college for more than 550,000 students this coming academic year. It was worth the wait.

    When we started work on this issue, I said that any long-term solution to student loan interest rates must help, not harm the students or their families, must not make college more expensive, and it must protect students in the future from spiking interest rates. I believe that this bipartisan bill accomplishes that goal.

    It locks in interest rates for borrowers when they sign on to their loans; it provides a reasonable cap to protect students from rising interest rates; and it rolls back the doubling of interest rates, saving students and families real money right now.

    Today's bipartisan student loan deal stands in stark contrast to the partisan bill passed by the House majority in May. The bill would have made college more expensive by nearly $4 billion to students and their families. It would have subjected students to a bait-and-switch scheme. It offered students teaser rates that balloon annually, leaving students deeper in debt and guessing what they will owe.

    If you look at this chart, you will see that, under the bipartisan agreement we're voting on today, it will cost students about $11,363. The current law raises the cost to $14,000, and the bill that passed the House, the Republican [[Page H5216]] bill, was $16,400. So it's been well worth students to have this disagreement, to have this wait so that we could save this kind of money for students and families.

    Next year's freshmen who borrow a maximum amount of subsidized and unsubsidized Stafford loans over 5 years would have paid $5,000 more in interest rates under the House Republican plan than under today's bipartisan compromise, and nearly $2,000 more than if we did nothing.

    The House majority's solution wasn't a solution at all. Their approach was best summed up by the chair of the Higher Education Subcommittee who recently said, ``It is not the role of the Congress to make college affordable or accessible.'' I couldn't disagree more. That statement explains why their bill piled debt on the backs of students rather than trying to lighten the load.

    The Senate bill before us today takes the opposite approach. It saves students and families money.

    I understand the concerns that some have raised by this solution. While it provides real relief for the next few years, it does not solve the long-term student debt crisis. We have much more work to do to address the underlying cost of college, and we must remain on guard against any unacceptable rise in interest rates.

    In the meantime, we now have a bill that will make a positive difference to families struggling to pay for college.

    Today, I ask the Republican majority to drop their support for the original House bill that was so devastating to students and families and, instead, support this bipartisan bill that delivers real interest rate relief for millions of Americans.

    I reserve the balance of my time.

    Mr. KLINE. Mr. Speaker, I yield 4 minutes to the gentlewoman from North Carolina (Ms. Foxx), the chair of the Higher Education Subcommittee.

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