Senator Tom Udall Statement on Senate Vote on Student Loan Rates

Senator Tom Udall
Senator Tom Udall

U.S. Senator Tom Udall  issued the following statement after voting against a measure that would allow interest rates on federal undergraduate subsidized Stafford Loans to rise to as high as 8.25 percent:

“After listening to this debate and weighing both sides, I couldn’t endorse this bill. I can’t support any measure that balances the budget on the backs of college students. The ability to get a college degree is too important for our students’ future – and for our country’s future.

“Higher education is at a tipping point, and we need a long-term plan that is sustainable and comprehensive. I will continue to work with my colleagues to achieve that goal. One principle should be clear: College should be within reach for all American families, not just the privileged few, or in the short-term. We should be investing in all students who want to earn a college degree.”

Senator Heinrich Votes On Bipartisan Bill To Lower Student Interest Rates

U.S. Senator Martin Heinrich voted for the Bipartisan Student Loan Certainty Act of 2013, a bill that lowers and caps interest rates on federal student loans, and protects borrowers from dramatic increases in the future. The proposal would cut rates on all new loans this year and save a typical undergraduate student in New Mexico $1,392 over the life of those loans. The bill passed 81 to 18.

Senator Martin Heinrich
Senator Martin Heinrich

“Keeping college within reach for New Mexico students is fundamental to a thriving middle class,” said Sen. Heinrich. “I have consistently said that I would work to ensure student loan interest rates remain low, and this is a good first step. This bipartisan proposal isn’t perfect, but it lowers interest rates for students in the near term and puts caps in place to protect students in the long term.”

On July 1, the interest rate on federally subsidized Stafford loans doubled from 3.4 percent to 6.8 percent, affecting more than 11 million students nationally, including 46,104 undergraduate students in New Mexico. Under the compromise plan, students would pay a fixed interest rate for the life of the loan based on the 10-year Treasury bill plus a percentage add-on for all loans issued on or after July 1, 2013.  Undergraduate borrowers would see their rates on new loans drop from 6.8 to 3.86 percent, and Graduate Unsubsidized Stafford borrowers will see their rates drop on new loans from 6.8 percent to 5.41 percent. And Grad PLUS and Parent PLUS borrowers would see their rates on new loans drop from 7.9 percent to 6.41 percent-the first reduction in years.

“This agreement is just one piece of the larger conversation concerning college affordability. During the reauthorization of the Higher Education Act, it’s critical that Congress address the factors that contribute to rising college costs and contain student loan debt in the long run,” said Sen. Heinrich.

Senator Heinrich also cosponsored the Reed-Warren amendment, a proposal that would have locked in reasonable caps of 6.8 percent for undergraduate and graduate loans, and 7.9 percent for PLUS loans, meaning they wouldn’t go any higher than they are set at right now.  The amendment failed by a vote of 46 to 53.

Senators Tom Udall and Martin Heinrich Call for Investigation of Allegations that “Debt Relief” Firms are Exploiting Students

U.S. Senators Tom Udall and Martin Heinrich have called on federal officials to investigate allegations that so-called “debt relief” companies have been using deceptive practices to profit from students seeking assistance in repaying their college loans.

The federal government provides tools to help students manage their college loans free of charge, but a new National Consumer Law Center report revealed that private companies are taking advantage of students by charging them up to $1,600 up front and $20-$50 in monthly fees to participate in these free federal repayment programs.

“Recently, I have heard of misleading ads geared towards New Mexico students and parents from organizations that aim to benefit from those who are not aware of the free borrower assistance programs provided by the federal government,” said Udall. “Our students are amassing record levels of debt in order to achieve their higher education degrees, and we need to do everything we can to ensure that unethical business practices are not taking advantage of the ongoing student debt crisis.”

“It’s disturbing to think that unscrupulous, private companies are trying to profit off student borrowers at a time when they are struggling to pay off their loans and make ends meet,” said Heinrich. “New Mexico students and their parents deserve to be protected from these deceptive and unethical practices.”

In a letter to Secretary of Education Arne Duncan, Federal Trade Commission Chairwoman Edith Ramirez and Consumer Financial Protection Bureau Director Richard Cordray, the senators joined 21 of their colleagues in noting that the report also revealed numerous potential violations of consumer protection laws and found that many for-profit companies falsely claim to be connected with the Department of Education and other government agencies.

Americans currently owe more than $1 trillion in student loans and the overall financial burden from student loan debt is second only to debt from mortgage borrowing. New Mexico has seen an increase in student loan borrowing as tuition rates have risen across the state. Moreover, there have also been reports in New Mexico of untrustworthy advertisements and websites aimed at lowering student loan payments or providing cash assistance.

LULAC Disappointed Over Senate Decision to Increase Student Loan Rates

Yesterday, the Senate failed to garner sufficient support to restore the student loan rate to 3.4 percent. Based upon the failure to act, the student loan rate has doubled and now stands at 6.8 percent.

Margaret Moran, National President of the League of United Latin American Citizens (LULAC), released the following statement on the Senate’s failure to prevent the doubling of the interest rate on student loans:

“In these times of economic hardship, the last issue that should be politicized is student loans,” said LULAC National President Margaret Moran. “Student loans provide an opportunity for low income students, a significant number of which are Hispanic, to get a college education which would have otherwise been out of reach. We should not be placing additional burdens on these students upon graduation. Such burdens will impact not only their career but their ability to own homes, and otherwise build their own American dream.”

The increase on student loan interest rates will impact over 7 million students who already feel that a secondary education is too expensive. After today’s failure to act, some Senators have indicated a desire to find a bipartisan solution. To date, however, no such solution exists.

Continued Moran, “For the sake of all our students, we call upon the Senate to reach an agreement to roll back student loan interest rates. This would result in saving money for students already struggling to stay in school and ensure that this country has a properly trained workforce.”

The League of United Latin American Citizens (LULAC) is the nation’s largest and oldest Hispanic civil rights organizations.

House Republicans Actually Pushing Plan That Makes Students Pay More

After letting student loan interest rates double last week, Speaker John Boehner and House Republicans had the gall to rally today outside the Capitol this week in support of their plan that would actually increase college costs for students.

john_boehner_Boehner and House Republicans passed a plan earlier this year that would actually pinch students’ wallets even more than their failure to act because “student loan rates could steadily climb and cost students more over the long haul,” under their plan, according to the Associated Press. House Democrats have been demanding an extension of current rates that expired on July 1st.

“It’s bad enough that House Republicans are so dysfunctional that they let student loan rates double, but now they’re just delusional if they think the American people won’t see through their plan to increase student loan interest rates over the long haul,” said Emily Bittner of the Democratic Congressional Campaign Committee. “Speaker Boehner and House Republicans can try to point their fingers at anyone else for student loan interest rates doubling, but they need to look in the mirror if they want to see who’s really to blame. It’s clear that Speaker Boehner and House Republicans are playing political games and standing with corporate special interests instead of supporting college students and middle class families to make college more affordable and accessible.”

BACKGROUND

AP: House Republican Plan Would Raise Student Loan Interest Rates Up to 8.5 Percent.
“Under the GOP proposal, student loans would be reset every year and based on 10-year Treasury notes, plus an added percentage. For instance, students who receive subsidized or unsubsidized Stafford student loans would pay the Treasury rate, plus 2.5 percentage points. Using Congressional Budget Office projections, that would translate to a 5 percent interest rate on Stafford loans in 2014, but the rate would climb to 7.7 percent for loans in 2023. Stafford loan rates would be capped at 8.5 percent, while loans for parents and graduate students would have a 10.5 percent ceiling under the GOP proposal.” Associated Press5/16/13

Under the House Republican Plan, Graduates Would Pay Almost $5,000 More in Student Loan Interest. 
“In real dollars, the GOP plan would cost students and families heavily, according to the nonpartisan Congressional Research Service. The office used the CBO projections for Treasury notes’ interest rates each year. Students who max out their subsidized Stafford loans over four years would pay $8,331 in interest payments under the Republican bill, and $3,450 if rates were kept at 3.4 percent. If rates were allowed to double in July, that amount would be $7,284 over the typical 10-year window to repay the maximum $19,000.” If the Republican plan were implemented, college graduates would pay $4,881 more in interest, compared to the current rate. Associated Press, 5/16/13

CBO: Federal Government Turns $51 Billion Profit on Student Loans.
According to the Huffington Post: “The Obama administration is forecast to turn a record $51 billion profit this year from student loan borrowers, a sum greater than the earnings of the nation’s most profitable companies and roughly equal to the combined net income of the four largest U.S. banks by assets. Figures made public Tuesday by the Congressional Budget Office show that the nonpartisan agency increased its 2013 fiscal year profit forecast for the Department of Education by 43 percent to $50.6 billion from its February estimate of $35.5 billion.” Huffington Post5/14/13

Senator Tom Udall Fighting to Keep Student Loans Affordable

Despite efforts by Udall and others to forge bipartisan agreement, Congress has not yet acted to keep student loan interest rates down

U.S. Senator Tom Udall issued the following statement about the automatic interest rate hike on new subsidized federal undergraduate Stafford loans, which went into effect today, doubling the interest rate on these loans:

“I am very disappointed that this increase went into effect. It happened despite efforts to work for a compromise – because Congress was unable to reach agreement to extend the lower rate. For thousands of New Mexico students, grants and loans make the difference between being able to attend college and not. Especially when the economy in New Mexico – and around the country – is still recovering, this isn’t the time to add a new barrier to students seeking a college degree. I’m going to keep working to find a compromise that will retroactively hold these rates in check.”

Udall last week joined 34 of his colleagues in introducing legislation that would cancel the hike and fix Stafford loan interest rates at 3.4 percent for new loans for one year. The fully paid for Keep Student Loans Affordable Act of 2013 (S. 1238) would allow Congress time to work on a long-term and sustainable approach for the federal student loan program. The compromise would save new undergraduate borrowers at New Mexico universities an average of almost $1,000 over the life of their loans.

The bill was necessary because negotiations with Senate Republicans broke down after Republicans blocked legislation to maintain the low student loan interest rates for two years, instead offering legislation with increasing interest rates that would exacerbate student debt loads.

The Keep Student Loans Affordable Act of 2013 is fully paid for by closing a loophole that currently allows those who inherit certain IRAs and 401(k)s to avoid paying the taxes on those accounts for many years. The bill does not create a new tax, it would simply cap the amount of time payment of taxes can be delayed at five years.

Udall has long said he wants to see student loan rates considered in a comprehensive way, through reauthorization of theHigher Education Act, to make college more affordable for all families and find a long-term solution that will help New Mexico students.

Last year, Udall also voted to extend the subsidized rate for new Stafford undergraduate loans for one year, in order to give Congress time to work on the broader issue. Udall has also supported several bills in the last two years to maintain the subsidized rate on new undergraduate student loans.

Senator Tom Udall Statement on Student Loan Interest Rates

Senator Tom Udall
Senator Tom Udall

U.S. Senator Tom Udall today issued the following statement on the Senate’s failure to advance legislation that would prevent federal student loan rates from doubling on July 1st. Senator Udall is a cosponsor of S. 953, the Student Loan Affordability Act, which would extend the 3.4 percent interest rate for two years.

“As the cost of higher education in New Mexico and elsewhere continues to rise, grants and loans often make the difference between being able to attend college or not. Many of our students and their families are already struggling to pay tuition and fees and rely on affordable loans to complete their undergraduate degrees. Congress must prevent new subsidized Stafford loans from doubling next month. Although I am disappointed that the Senate does not yet have an agreement, I am hopeful that we will reach one before July 1st, as we did just last year. Congress urgently needs to provide certainty for students and their families by keeping costs down and finding a long-term, comprehensive solution on student loan rates and college affordability” Senator Udall said.


Text of S. 953, the Student Loan Affordability Act