Unless Congress acts, interest rates on new subsidized student loans will double on July 1, 2013, impacting thousands of students across New Mexico.
With rising tuitions and fees at public universities, taking out loans to make the investment in higher education is almost par for the course. This year, student debt topped $1 trillion, with more than 37 million Americans owing thousands of dollars for their education that could take decades to pay back. Americans now owe more on our student loans than we do on our credit cards.
This debt has a powerful impact on middle-class families and household spending. So this issue is not just about students, but it’s also about the economy.
The good news is we can do something about it. And we must.
The proposal I’m cosponsoring in the U.S. Senate would stop interest rates from doubling and is fully paid for. The Student Loan Affordability Act would freeze need-based student loan interest rates at the current 3.4 percent for two years while Congress works on a long-term, bipartisan solution to slow the rapid accumulation of student-loan debt.
Unfortunately, when the Student Loan Affordability Act was voted on in the Senate recently, it failed to get enough Republican support and didn’t meet the 60 vote threshold to end debate.
In the U.S. House of Representatives, Republicans are pushing for an alternative proposal that could cause student loan rates to more than double over the next 10 years, burdening students and families with more debt and higher monthly payments. This legislation would make a profit off of student loans to pay down the national debt, effectively robbing Peter to pay Paul.
This scenario of partisan politics and a looming deadline may seem all too familiar. That’s because we were in the same situation last summer. For the second year in a row, Congress must step in to ensure interest rates don’t double. These year-to-year extensions put stress on our middle class and our students in a time when they should be focused on learning skills that will help them succeed in today’s economy. The Higher Education Act, the appropriate vehicle to change the way interest rates are calculated, doesn’t expire until the end of this year. Passing a full two-year extension gives Congress the time to consider all the proposals in the context of containing college costs, not just loan rates.
I was raised to believe that education was important, not only to getting ahead, but also to be able to contribute back to our community. These are the same values my wife and I seek to pass along to our sons.
A post-secondary education remains critical for thousands of students and their families in New Mexico as they seek to move into or remain part of the middle class. Recent reports from the Bureau of Labor Statistics show that college graduates are nearly twice as likely to find work as those with only a high school diploma.
Earning a college degree shouldn’t be a luxury, but something that every American family can afford. Congress must work together to keep student loan interest rates low so that education remains affordable for anyone who seeks a college education.
And, yes, I believe compromise and even bipartisanship are possible. Our country is strong because of rigorous debate—but debate doesn’t mean endless gridlock. Despite our differences, there are issues where both parties can come together and find common ground. Keeping student loan interest rates low to give young people a fair shot at succeeding in a tough economy is, and must be, one of them.
Martin Heinrich represents New Mexico in the United States Senate. Elected in 2012, Heinrich serves on the Senate Energy and Natural Resources, Intelligence, and Joint Economic Committees.