US Senate Committee on Health, Education, Labor, & Pensions

On Eve of Senate Vote, Harkin Urges Support for Bill to Allow Borrowers to Refinance Student Loans

Tuesday, June 10, 2014

WASHINGTON, D.C.—Senator Tom Harkin (D-IA), Chairman of the Senate Health, Education, Labor, and Pensions (HELP) Committee, today spoke on the Senate floor ahead of tomorrow’s Senate vote on the Bank on Students Emergency Loan Refinancing Act, a bill that would allow borrowers with outstanding student loan debt to refinance at the lower interest rates currently offered to new borrowers and achieve much-needed savings for families across the country. Harkin also announced that he would introduce a draft Higher Education Act proposal in the coming weeks that addresses college affordability, student debt, accountability, and transparency. Harkin, as Chair of the HELP Committee, has convened ten hearings on the reauthorization of the Higher Education Act, the main federal law overseeing the higher education system in the United States.

“This bill will provide relief to student borrowers who took out loans several years ago only to see that the rates for student loans have since gone down…this bill is just common sense,” Harkin said. “American consumers have been able to take advantage of historically-low interest rates on their homes and cars. Let’s let them do the same for student loans.  For their good and for the good of the American economy.”

“In the coming weeks, I plan to release some initial thinking on what issues we should be tackling in a comprehensive reauthorization of the Higher Education Act. Our committee, over the past several months, has held more than 10 hearings on issues ranging from teacher preparation to accreditation. These hearings have been bipartisan, and the Committee remains on a bipartisan path toward taking up the Higher Education Act. What I plan to put forward is consistent with that bipartisan approach; it simply provides clear guidelines based on all the work we have done to date. The plan I put forward will focus on four topics: affordability, student debt, accountability, and transparency […] I look forward to sharing that proposal shortly, and I am willing to speak with anyone who has any ideas on how to improve on our initial thinking.”

“Certainly, in today’s difficult economy, with young Americans in particular struggling to find good employment and a foothold in life, it is unacceptable to ask students, graduates, and their families to shoulder unnecessarily high student loan interest payments.  I hope that the Senate can come together on a bipartisan basis to find practical solutions to these challenges.”

Chairman Harkin’s remarks, as prepared for delivery, are as follows.

“I rise to speak in favor of the Bank on Students Emergency Loan Refinancing Act, also referred to as the Fair Shot for College Affordability. We've been calling this agenda a Fair Shot but let's be honest this is common sense. Raising the minimum wage is good for American workers.  Equal pay for equal work is the right thing to do for women.  And this bill that lets struggling student loan borrowers refinance their loans is not only good for them, but also the economy. Families across the country are struggling with student loan debt and that's holding them back personally and it’s holding us back as a nation. It’s holding them back from buying homes and starting families. It’s holding back doctors from practicing primary care. It’s hurting people trying to save for retirement.  It’s hurting rural communities that are working to attract doctors and lawyers and veterinarians.   

“Don’t take my word for it, some of the nation’s most prominent economic officials have raised concerns over student debt. Members of the Federal Reserve Board’s Federal Open Market Committee, in March 2013, expressed concern that ‘the high level of student debt’ is a risk to aggregate household spending over the next three years. The Treasury Department’s Office of Financial Research has stated that student debt ‘could significantly depress demand for mortgage credit and dampen consumption.’ New York Fed President William Dudley told reporters in November 2013, ‘People can have trouble with the student loan debt burden—unable to buy cars, unable to buy homes…’

“I am pleased to see President Obama taking action to ease the burden of federal student loan debt for struggling borrowers.  I am also pleased to see the Administration taking critical steps to ensure that servicemembers are getting the benefits they’ve earned through their service to our country.  But it’s very clear that much more needs to be done.  This bill will provide relief to student borrowers who took out loans several years ago only to see that the rates for student loans have since gone down. Last year, I worked with members on both sides of the aisle to pass the Bipartisan Student Loan Certainty Act, which authorized student loan interest rates that last year provided a 3.86 percent interest rate for undergraduates, 5.41 percent for Stafford loans for graduate students, and 6.41 percent for parent and graduate PLUS loan borrowers. We want borrowers who may have taken out loans in the past with higher rates to take advantage of these lower rates.

“The Department of Education estimates that 25 million borrowers would likely refinance their existing student loans under this legislation, saving them an average of $2,000 over the life of the loan.

“Like I said, this bill is just common sense. American consumers have been able to take advantage of historically low interest rates on their homes and cars. Let’s let them do the same for student loans.  For their good and for the good of the American economy.

“While the issue of student debt is critically important, it is by no means the only issue that deserves attention in higher education policy. That is why, in the coming weeks, I plan to release some initial thinking on what issues we should be tackling in a comprehensive reauthorization of the Higher Education Act. Our committee, over the past several months, has held more than 10 hearings on issues ranging from teacher preparation to accreditation. These hearings have been bipartisan, and the Committee remains on a bipartisan path toward taking up the Higher Education Act. What I plan to put forward is consistent with that bipartisan approach; it simply provides clear guidelines based on all the work we have done to date. 

“The plan I put forward will focus on four topics: affordability, student debt, accountability, and transparency. As it relates to affordability, we hope to increase affordability and reduce college costs on the front end by entering into a partnership with states, incentivizing those states that make strong investments in their systems of higher education.  With student debt, we plan to help student borrowers better manage their loan debt through measures such as better up-front and exit counseling on their federally guaranteed loans. On accountability, we plan to hold schools more accountable to both students and taxpayers by ensuring no federal money is going to things like marketing and advertising to drive up enrollments. We also hope to empower students and families through greater transparency: by giving students and families better information from the beginning of the college process, selecting a school, all the way through to making sure they know all of their repayment options when they graduate and are able to make the right choice for their particular circumstances.

“I look forward to sharing that proposal shortly, and I am willing to speak with anyone who has any ideas on how to improve on our initial thinking.

“College affordability, skyrocketing student debt, accountability and transparency – these are all very high-stakes issue for prospective students, students and graduates in all of our states. Certainly, in today’s difficult economy, with young Americans in particular struggling to find good employment and a foothold in life, it is unacceptable to ask students, graduates, and their families to shoulder unnecessarily high student loan interest payments.  I hope that the Senate can come together on a bipartisan basis to find practical solutions to these challenges.”

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