First Posted: 7/1/2013
If one of our nation’s priorities is to revive the innovative and hard-working spirit that helped make America great, then we need to make sure our college-bound students and recent graduates can afford an education. A college education, or some kind of advanced skills training, is more important than ever, and we owe it to our youth to put them in the best possible position to get a job.
Unfortunately, in the last five years, big-government enthusiasts have increased government control over interest rates on student loans, which has inevitably left the future of our youth in the hands of bickering politicians and Washington bureaucrats. Before the 2006 elections, Democrats made politically-driven, unsustainable promises to keep higher education affordable. This was done by arbitrarily setting rates of subsidized loans at 3.4 percent. Predictably, this idea proved fiscally short-sighted and created our current crises because it was set as a short-term solution to expire after four years. After continuing to kick the can down the road for several years, we now find ourselves at a crossroads. With undergraduate Stafford loans doubling yesterday, it is time for real, long-term reform to take place. We need reform that is tailored to serve the needs of the people, not the interests of the politicians. With time running out, the House of Representatives has acted to solve this problem. It’s now time for the Senate and president to act.
In May, the House passed the Smarter Solution for Students Act (H.R. 1991). The Smarter Solution for Students Act creates a system where interest rates on student loans are market-based and adjusted yearly, while still providing a reasonable cap on rates so that borrowers are protected. This proposal is very similar to the plan the president offered in his budget, tying interest rates to the market.
In 2006, we allowed politicians to assume the authority to set rates however they saw fit. Instead of ensuring stability in the student loan market, we now see they have done nothing but create uncertainty and market fluctuations that harm students and their families’ ability to plan accordingly. With government out of the student loan business, prices will stabilize, and rates will no longer vary unpredictably year to year based on electoral promises and political games in Washington. This 11th-hour scramble to solve the student loan crisis is a perfect demonstration of why we need to take the politics out of student loans once and for all.
Allowing the student loan rate to double will not only hurt those currently taking out loans, but the economy as a whole will be damaged. While it is imperative that we don’t allow this to happen, it is just as important that any steps we take will allow for long-term stability in the student loan market. The Smarter Solution for Students Act is a much-needed, commonsense piece of legislation. It’s now up to the president and Senate to do what is right for America’s future and take up this bill. As a member of the Education and the Workforce Committee, I will continue to fight for less Washington control, more money in the classroom, and a brighter future for our children and grandchildren.
— U.S. Rep. Richard Hudson represents the 8th Congressional District. He can be reached at 704-786-1612.