Smarter Solutions for Students Act

Floor Speech

Mr. HOEVEN. I come to the floor today to speak again in support of the permanent solution to the student loan program. Like my colleague from the great State of North Carolina, I think that is exactly what we have with the bipartisan Student Loan Certainty Act.

I want to acknowledge all of those who worked so hard to come together and support this legislation. It is actually not bipartisan, it is tripartisan. Former Governor King is an Independent, so you have Republicans, Democrats, and Independents all in support of this legislation. That is what it takes. It takes people coming together across the aisle doing good work. That is what they have done here to put this legislation together. I am pleased to be supporting it.

I come today to call on all of our colleagues to support it as well. The plan provides students with dependable low-cost financing on a long-term basis. That is the key. This is a long-term fix. It is called the Student Loan Certainty Act because it provides just that, it provides certainty for students and for families.

Again, let's take a minute to review how the plan works. The plan would tie all student loan rates to the 10-year Treasury note rate to reflect both current market and employment conditions. For this year that rate index would be 1.81 percent. Then both subsidized and unsubsidized Stafford loans would be 2.05 percent over that rate. Graduate student rates would be 3.6 percent over the 10-year Treasury rate, PLUS loans would be 4.6 percent over the Treasury rate.

It is important to note that the rate on those loans is then fixed, so you have that certainty when you take out the loan. You know what the rate on that loan is going to be for the life of the loan. It is important for our borrowers.

Let's take a minute to compare this program with the existing student loan program. Subsidized Stafford loans right now are charged at 6.8 percent. It was 3.4 percent, but now it is 6.8 percent, because as my colleague identified the program had expired.

We are in this situation where we are going with short-term extensions. So we faced these periods like right now where the program has expired, so the rate for Stafford loans is 6.8 percent. Under this program, that goes to 3.86 percent this year--3.86 percent compared to 6.8 percent.

The same thing for unsubsidized Stafford loans. Now 60 percent of the borrowers, the undergraduate borrowers, borrow unsubsidized Stafford loans. A lot of the lower income students who borrow subsidized loans also borrow unsubsidized loans. They were paying that 6.8 percent even before the program expired. For all of those undergraduate students, the rate goes down to 3.68 percent. That is a big-time savings for undergraduate students. Furthermore, the program is capped at 8.25 percent, so they have the certainty of a cap as well. They save money now. As was pointed out by my colleagues, they save money now and they have the certainty of a cap as well.

There are caps for both the graduate students and for the PLUS loans that parents take out as well. In addition to the caps, there is another safety net in the program. The other safety net in the bill is the income-based repayment level. Under the income-based repayment level provisions, student loan payments are limited to 15 percent of income. Any balance remaining on the loan after 25 years is forgiven. So you have both safety nets. You have the caps and you have the repayment limit provision to protect borrowers.

This program is designed solely for students and their families. Let me repeat that. This program is designed solely for students and their families. Unlike the existing student loan program, it does not subsidize Federal health care or any other program. It is for the students and their families alone, period. Again, as my colleagues noted, a year ago we extended the student loan program. I was actually a member of the conference committee for MAP-21, the Department of Transportation reauthorization legislation. In that legislation we not only reauthorized the DOT budget, we also reauthorized Federal flood insurance as well.

In addition, we extended for 1 year the reauthorization of the student loan program. The reason we extended the student loan program for 1 year was so we could come up with a permanent solution, not so we could come up with another short-term extension but specifically so we could come up with a permanent solution. That is exactly what this is.

The bipartisan Student Loan Certainty Act provides that certainty for students, for families. It is a long-term permanent fix for our students. So I join with my colleagues and I call on both sides of the aisle, all of us, to come together. Let's fix this for our students. Let's get it in place. Let's get it over to the House. I believe they will pass it as well. Let's have this ready for our students as they are preparing to enter college this fall.

With that, again, I thank everyone who has worked so hard on this legislation.

I yield the floor.

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