```

[House Report 113-82]
[From the U.S. Government Publishing Office]

113th Congress   }                                      {  Rept. 113-82
                        HOUSE OF REPRESENTATIVES
 1st Session     }                                      {        Part 1

======================================================================

 
                   SMARTER SOLUTIONS FOR STUDENTS ACT

                                _______
                                

  May 20, 2013.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

Mr. Kline, from the Committee on Education and the Workforce, submitted 
                             the following

                              R E P O R T

                             together with

                             MINORITY VIEWS

                        [To accompany H.R. 1911]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Education and the Workforce, to whom was 
referred the bill (H.R. 1911) to amend the Higher Education Act 
of 1965 to establish interest rates for new loans made on or 
after July 1, 2013, having considered the same, report 
favorably thereon with an amendment and recommend that the bill 
as amended do pass.
    The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Smarter Solutions for Students Act''.

SEC. 2. STUDENT LOAN INTEREST RATES.

  Section 455(b) of the Higher Education Act of 1965 (20 U.S.C. 
1087e(b)) is amended--
          (1) in paragraph (7)--
                  (A) in the paragraph heading, by inserting ``, and 
                before july 1, 2013'' after ``2006'';
                  (B) in subparagraph (A), by inserting ``and before 
                July 1, 2013,'' after ``2006,'';
                  (C) in subparagraph (B), by inserting ``and before 
                July 1, 2013,'' after ``2006,''; and
                  (D) in subparagraph (C), by inserting ``and before 
                July 1, 2013,'' after ``2006,'';
          (2) by redesignating paragraphs (8) and (9) as paragraphs (9) 
        and (10), respectively; and
          (3) by inserting after paragraph (7), the following:
          ``(8) Interest rate provision for new loans on or after july 
        1, 2013.--
                  ``(A) Rates for fdsl and fdusl.--Notwithstanding the 
                preceding paragraphs of this subsection, for Federal 
                Direct Stafford Loans and Federal Direct Unsubsidized 
                Stafford Loans for which the first disbursement is made 
                on or after July 1, 2013, the applicable rate of 
                interest shall, during any 12-month period beginning on 
                July 1 and ending on June 30, be determined on the 
                preceding June 1 and be equal to--
                          ``(i) the high-yield 10-year Treasury notes 
                        auctioned at the final auction held prior to 
                        such June 1; plus
                          ``(ii) 2.5 percent,
                except that such rate shall not exceed 8.5 percent.
                  ``(B) PLUS loans.--Notwithstanding the preceding 
                paragraphs of this subsection, for any Federal Direct 
                PLUS Loan for which the first disbursement is made on 
                or after July 1, 2013, the applicable rate of interest 
                shall, during any 12-month period beginning on July 1 
                and ending on June 30, be determined on the preceding 
                June 1 and be equal to--
                          ``(i) the high-yield 10-year Treasury notes 
                        auctioned at the final auction held prior to 
                        such June 1; plus
                          ``(ii) 4.5 percent,
                except that such rate shall not exceed 10.5 percent.
                  ``(C) Consolidation loans.--Notwithstanding the 
                preceding paragraphs of this subsection, any Federal 
                Direct Consolidation Loan for which the application is 
                received on or after July 1, 2013, shall bear interest 
                at an annual rate on the unpaid principal balance of 
                the loan that is equal to the weighted average of the 
                interest rates on the loans consolidated, rounded to 
                the nearest higher one-eighth of one percent.''.

SEC. 3. BUDGETARY EFFECTS.

  (a) Paygo Scorecard.--The budgetary effects of this Act shall not be 
entered on either PAYGO scorecard maintained pursuant to section 4(d) 
of the Statutory Pay-As-You-Go Act of 2010.
  (b) Senate Paygo Scorecard.--The budgetary effects of this Act shall 
not be entered on any PAYGO scorecard maintained for purposes of 
section 201 of S. Con. Res. 21 (110th Congress).

                                Purpose

    H.R. 1911, the Smarter Solutions for Students Act, 
strengthens federal student loan programs and serves the best 
interests of both borrowers and taxpayers by taking Washington 
politicians out of the business of setting student loan 
interest rates and moving all federal student loans (except 
Perkins loans) to a market-based rate.

                            Committee Action

    As the Committee on Education and the Workforce continues 
to evaluate the appropriate role of the federal government in 
higher education, simplifying and strengthening federal aid 
programs to serve students, families, and taxpayers remains a 
top priority. Instead of subjecting interest rates to the whims 
of Washington politicians, we believe student loan interest 
rates should be aligned with the free market.

                             112TH CONGRESS

Hearing--Second session

    On March 28, 2012, the Committee on Education and the 
Workforce held a hearing in Washington, D.C. entitled, 
``Reviewing the President's Fiscal Year 2013 Budget for the 
U.S. Department of Education.'' The purpose of the hearing was 
to discuss the fiscal year 2013 budget proposal of the U.S. 
Department of Education. Testifying before the committee was 
the Honorable Arne Duncan, Secretary, U.S. Department of 
Education, Washington, D.C.

Legislative action--Second session

    On April 25, 2012, Rep. Judy Biggert (R-IL) introduced H.R. 
4628, the Interest Rate Reduction Act. The bill reduced the 
interest rate on subsidized Stafford loans made to 
undergraduate students from 6.8 percent to 3.4 percent for one 
year, from July 1, 2012 through June 30, 2013. To offset the 
increase in mandatory spending, the bill repealed the 
Prevention and Public Health Fund authorized under Section 4002 
of the Patient Protection and Affordable Care Act and rescinded 
the balance of unobligated monies made available for the fund.
    On April 27, 2012, the House of Representatives passed H.R. 
4628 by a vote of 215 to 195.
    Though H.R. 4628 was never considered by the Senate, its 
provisions were included in the Conference Report for H.R. 
4348, the Moving Ahead for Progress in the 21st Century Act 
(MAP-21), sponsored by Rep. John Mica (R-FL). To partially 
offset the increase in mandatory spending that resulted from 
the temporary reduction in interest rates on subsidized 
Stafford loans, the bill permanently restricted both the period 
of eligibility to borrow subsidized Stafford loans and reduced 
the period during which the in-school interest subsidy may be 
provided to 150 percent of the published length of a student's 
educational program.
    On June 29, 2012, the House of Representatives passed the 
Conference Report to H.R. 4348 by a vote of 373 to 52.
    On June 29, 2012, the Senate passed the Conference Report 
to H.R. 4348 by a vote of 74 to 19.
    On July 6, 2012, the President of the United States signed 
H.R. 4348 into law (P.L. 112-141).

                             113TH CONGRESS

Hearings

    On March 13, 2013, the Committee on Education and the 
Workforce held a hearing in Washington, D.C. entitled, 
``Keeping College Within Reach: Examining Opportunities to 
Strengthen Federal Student Loan Programs.'' The purpose of the 
hearing was to examine ways to strengthen federal student loan 
programs, as well as to explore how moving to a market-based or 
variable interest rate on all loans could benefit both students 
and taxpayers. Testifying before the committee were: Dr. 
Deborah Lucas, Professor, Sloan School of Management, 
Massachusetts Institute of Technology, Cambridge, 
Massachusetts; Mr. Jason Delisle, Director, Federal Education 
Budget Project, New America Foundation, Washington, D.C.; Mr. 
Justin Draeger, President and Chief Executive Officer, National 
Association of Student Financial Aid Administrators (NASFAA), 
Washington, D.C.; and Dr. Charmaine Mercer, Vice President of 
Policy, Alliance for Excellent Education, Washington, D.C.
    On April 16, 2013, the Committee on Education and the 
Workforce Subcommittee on Higher Education and Workforce 
Training held a hearing in Washington, D.C. entitled, ``Keeping 
College within Reach: The Role of Federal Student Aid 
Programs.'' The purpose of the hearing was to examine the 
federal role in higher education and lay out the pros and cons 
of shifting the focus of federal student aid programs from 
enhancing access to improving student outcomes. Testifying 
before the subcommittee were: Mr. Terry W. Hartle, Senior Vice 
President, Division of Government and Public Affairs, American 
Council on Education, Washington, D.C.; Ms. Patricia McGuire, 
President, Trinity Washington University, Washington, D.C.; Mr. 
Dan Madzelan, Former Employee (Retired), U.S. Department of 
Education, University Park, Maryland; and Ms. Moriah Miles, 
State Chair, Minnesota State University Student Association, 
Mankato, Minnesota.

Legislative action

    On May 9, 2013, Chairman John Kline (R-MN) and Higher 
Education and Workforce Training Subcommittee Chairwoman 
Virginia Foxx (R-NC) introduced H.R. 1911, the Smarter 
Solutions for Students Act. The bill moves all federal student 
loans (except Perkins loans) to a market-based interest rate.
    On May 16, 2013, the Committee on Education and the 
Workforce considered H.R. 1911 in legislative session and 
reported it favorably, as amended, to the House of 
Representatives by a bipartisan vote of 24-13.
    The committee considered and adopted the following 
amendment to H.R. 1911:
     Subcommittee Chairwoman Virginia Foxx (R-NC) 
offered an amendment in the nature of a substitute to make a 
technical change to the bill. The amendment was adopted by 
voice vote.
    The committee further considered the following amendments 
to H.R. 1911, which were not adopted:
     Rep. Joe Heck (R-NV) offered an amendment to 
allocate a portion of the savings generated under the bill to 
Pell Grants. The amendment was withdrawn.
     Rep. Joe Heck (R-NV) offered an amendment to 
provide the Secretary of Education with authority to reduce the 
interest rate on student loans, if a borrower makes the first 
48 payments on time. The amendment was withdrawn.
     Rep. John Tierney (D-MA) offered an amendment to 
set federal student loan interest rates as the same rate that 
the Federal Reserve charges to banks for two years. The 
amendment failed by a vote of 14-23.
     Rep. Joe Courtney (D-CT) offered an amendment to 
extend the 3.4 percent interest rate on subsidized Stafford 
loans for two years. The amendment failed by a vote of 15-21.
    Below is a summary of H.R. 1911.

                                Summary

    The Smarter Solutions for Students Act moves all federal 
student loans (except Perkins loans) to a market-based interest 
rate. Under the legislation, student loan interest rates would 
reset once a year and move with the market, much like they did 
from 1992 to 2006. Interest rates would be set using the 
following formula:
     Stafford loans (subsidized and unsubsidized): 10-
year Treasury Note plus 2.5 percent, capped at 8.5 percent.
     PLUS loans (graduate and parent): 10-year Treasury 
Note plus 4.5 percent, capped at 10.5 percent.

                            Committee Views

Introduction

    In 2006, Congressional Democrats made a series of campaign 
promises to the American people, including a pledge to make 
college ``affordable and accessible to all'' by permanently 
reducing all student loan interest rates. After gaining control 
of Congress in 2007, they realized their political promises 
were too expensive, so they championed legislation to 
temporarily phase down interest rates on new subsidized 
Stafford loans to undergraduate students from 6.8 percent to 
3.4 percent over four years. Instead of working with 
Republicans on responsible solutions to help make higher 
education more affordable for students in the long run, the 
Democratic Congress chose to ignore the problem and kick the 
can down the road, creating a student loan interest rate cliff 
in 2012.
    Democrats had a second opportunity to advance a more 
permanent solution to the student loan interest rate problem in 
2010, as part of the Student Aid and Fiscal Responsibility Act 
(SAFRA). SAFRA produced $68 billion in ``savings'' through the 
nationalization of the federal student loan program. At this 
time, the Democratic Congress could have allocated funds to 
extend the interest rate on subsidized loans or lower interest 
rates for all borrowers. Instead, they chose to siphon almost 
$9 billion away from federal student aid programs to fund 
Obamacare.
    When faced with the scheduled increase in subsidized 
Stafford loans last summer, Committee Republicans agreed to 
support a one-year extension of the artificially low interest 
rate with the promise that we would use that time to develop a 
long-term solution that better aligns student loan interest 
rates with the free market.

Consensus around market-based rates

    There is a growing consensus that a long-term, market-based 
student loan interest rate solution is the best option for 
students, families, and taxpayers. President Obama included a 
comprehensive and permanent move to a market-based interest 
rate for all federal student loans in his Fiscal Year 2014 
budget request. Senate Republicans, led by Senators Tom Coburn 
(R-OK), Richard Burr (R-NC), and Lamar Alexander (R-TN), 
introduced S. 682, the Comprehensive Student Loan Protection 
Act. The bill moves Stafford loans and PLUS loans to a market-
based interest rate based on the 10-year Treasury Note plus 3 
percent.
    The Moment of Truth Project, which aims to utilize the 
recommendations of the bipartisan National Commission on Fiscal 
Responsibility and Reform to spark national debate, recently 
recommended moving to a market-based interest rate as a way to 
deal with interest rates on a permanent, rather than annual, 
basis.\1\ The project is an undertaking of the Committee for a 
Responsible Federal Budget, which is made up of some of the 
nation's leading budget experts, including many of the past 
Chairmen and Directors of the Budget Committees, the 
Congressional Budget Office, the Office of Management and 
Budget, the Government Accountability Office, and the Federal 
Reserve Board.
---------------------------------------------------------------------------
    \1\See http://www.momentoftruthproject.org/sites/default/files/
Full%20Plan%20of%20 Securing%20America%27s%20Future.pdf pg. 31.
---------------------------------------------------------------------------
    During a March 13, 2013 hearing entitled, ``Keeping College 
Within Reach: Examining Opportunities to Strengthen Federal 
Student Loan Programs,'' the Committee on Education and the 
Workforce discussed the failings of the current student loan 
interest rate structure for students, families, and taxpayers. 
At the hearing, Mr. Jason Delisle, Director of the Federal 
Education Budget Project at New America Foundation, highlighted 
the need to move to a permanent, market-based interest rate on 
federal student loans. He stated:

          If there is one thing recent debates about interest 
        rates on federal student loans have demonstrated, it is 
        that Congress needs to develop a rational, long-term 
        plan for setting rates. Currently, the program charges 
        borrowers the same fixed interest rates no matter what 
        happens to other interest rates in the economy. And the 
        rates are arbitrary. Congress wrote them into law back 
        in 2002--and with the exception of an arbitrary cut to 
        3.4 percent on some loans--those rates have been in law 
        ever since.\2\
---------------------------------------------------------------------------
    \2\http://edworkforce.house.gov/calendar/
eventsingle.aspx?EventID=322265. 

    At the same hearing, Mr. Justin Draeger, President of the 
National Association of Student Financial Aid Administrators, 
stated students and parents often question why most of their 
federal loans are fixed at nearly seven percent when the market 
rate is much lower, and don't understand why each type of 
---------------------------------------------------------------------------
student loan has a different rate. In his testimony, he said:

          The current structure of federal student loan 
        interest rates is out of step with market rates and 
        thereby confuses students and families. Students and 
        parents often question why federal student loan 
        interest rates are higher than nearly all other 
        installment loans, particularly for families with good 
        credit. And the truth is, there is no good, reasonable 
        answer to that question.\3\
---------------------------------------------------------------------------
    \3\Id.

    Dr. Deborah Lucas, Sloan Distinguished Professor of Finance 
at the Massachusetts Institute of Technology, highlighted 
concerns about the long-term consequences of maintaining a 
fixed-based approach instead of moving to a market-based 
interest rate. During her testimony, she summarized the overall 
---------------------------------------------------------------------------
problem with the current student loan interest rate structure:

          The current practice of setting fixed interest rates 
        that extend many years into the future--rather than 
        linking them by formula to prevailing market interest 
        rate conditions--has adverse consequences for students, 
        for taxpayers, and for the stability and control of 
        budgetary costs.\4\
---------------------------------------------------------------------------
    \4\Id.
---------------------------------------------------------------------------

A smarter solution for students

    Building on the efforts put forward by President Obama, 
Senate Republicans, and leading higher education and budget 
experts, Chairman John Kline (R-MN) and Representative Virginia 
Foxx (R-NC) introduced H.R. 1911, the Smarter Solutions for 
Students Act. This commonsense legislation simply moves all 
federal student loans (except Perkins loans) to a market-based 
interest rate. Under the bill, student loan interest rates 
would reset once a year and move with the free market, much 
like they did from 1992 to 2006. Interest rates for subsidized 
and unsubsidized Stafford loans would be based off of the 10-
year Treasury Note plus 2.5 percent, capped at 8.5 percent. 
Interest rates for graduate and parent PLUS loans would be 
based off of the 10-year Treasury Note plus 4.5 percent, capped 
at 10.5 percent.
    Overall, subsidized Stafford loans make up a fraction of 
all federal student loans, about 42 percent of all Direct Loans 
disbursed and 26.2 percent of total Direct Loan volume in 
Fiscal Year (FY) 2013. In fact, 73 percent of all borrowers 
take out both subsidized and unsubsidized Stafford loans, so 
very few students are exclusively benefitting from the current 
artificially low interest rate. The Smarter Solutions for 
Students Act will immediately result in a lower interest rate 
for both unsubsidized Stafford loan and PLUS loan borrowers, 
who represent the majority of total borrowers. Additionally, 
the legislation prevents subsidized Stafford loans from 
doubling to 6.8 percent, instead moving to an interest rate of 
approximately 4.4 percent for these borrowers.
    H.R. 1911 permanently removes Washington politicians from 
the business of setting student loan interest rates. Temporary 
fixes stemming from unrealistic campaign promises only promote 
instability and cause Congress to take rash actions that could 
be harmful to students, families, and our nation's student 
financial aid programs in the long run. For example, last year 
Congress scrambled to find $6 billion in offsets to extend the 
interest rate for only one year. The only way this could be 
accomplished under the wire was by enacting a change to current 
law that permanently restricted a student benefit.
    It is time to put an end to short-term fixes and patches 
that only temporarily address our financial aid challenges. 
Committee Republicans believe the Smarter Solutions for 
Students Act takes important steps in the right direction by 
getting politicians out of the business of setting student loan 
interest rates and changing the structure of all federal 
student and parent loans to reflect prevailing market interest 
rates.

Helps all students and stops picking winners and losers

    The Smarter Solutions for Students Act is a comprehensive, 
responsible solution that will benefit all students and parents 
who borrow Stafford and PLUS loans. Under current law, most 
borrowers are stuck with a high fixed interest rate set by 
Congress that is inconsistent with today's low interest rate 
environment. The legislation ensures all borrowers can take 
advantage of lower interest rates when available and protects 
borrowers against higher interest rates with a reasonable cap.
    Unlike the proposals by the Obama administration or Senate 
Republicans, H.R. 1911 allows interest rates on federal student 
loans to reset once a year. By allowing the interest rate to 
reset annually, the federal government stops picking winners 
and losers based on when a student takes out a loan. It also 
more evenly distributes the federal subsidy among students from 
different academic classes (freshman, sophomore, etc). As Dr. 
Lucas pointed out at the March 13, 2013 hearing:

          For students, the current policy creates large swings 
        in the value of government assistance from year to 
        year. Similar students that attend the same school but 
        in different years receive very different amounts of 
        support: Subsidies will be small when market interest 
        rates are low and large when rates are high. As well as 
        raising fairness concerns, the volatility makes it more 
        difficult for prospective students to assess the 
        affordability of pursuing a higher education.\5\
---------------------------------------------------------------------------
    \5\Id.

    Dr. Lucas also noted that moving to a market-based interest 
rate would help stabilize the investment in federal student 
loan programs. On this point, Dr. Lucas stated, ``Adopting the 
alternative of market-indexed rates would reduce the volatility 
of subsidies for borrowers and taxpayers, and also help to 
stabilize the budgetary costs of the programs.''\6\
---------------------------------------------------------------------------
    \6\Id.
---------------------------------------------------------------------------
    Under current law, a typical graduating senior could have 
federal student loans with five different interest rates, one 
for each of the four years that the rate on subsidized loans 
was phased down and a fifth based on the rate for unsubsidized 
loans. The Smarter Solutions for Students Act moves to a single 
variable rate for Stafford loan borrowers, simplifying 
financial aid for students and their families.
    While helping all students take advantage of lower interest 
rates when available, the Smarter Solutions for Students Act 
also protects students in high interest environments. Unlike 
the Obama administration's plan, the legislation sets a 
reasonable cap on interest rates. Borrowers can also choose to 
maintain a variable interest rate or lock in their interest 
rate for the life of the loan by taking out a consolidation 
loan. Upon graduation, borrowers will have the most up-to-date 
information about the interest rate environment and the job 
markets in their area, and will be able to make an informed 
decision that works in the best interest of their own financial 
situation. Further, the Smarter Solutions for Students Act 
maintains a number of important protections in the Higher 
Education Act designed to assist borrowers struggling with high 
interest rate environments or having difficulty with loan 
repayment. Students can take advantage of numerous generous 
initiatives, including the income-based repayment plan, loan 
forgiveness programs, and opportunities for deferment or 
forbearance.

Provides certainty for college students and ends election year games

    The Smarter Solutions for Students Act puts an end to 
temporary fixes and campaign promises. The legislation provides 
stability for low- and middle-income students working to 
finance their postsecondary education, and prevents future 
uncertainty about whether Congress is going to act in time to 
change the interest rate. This point is illustrated most 
prominently by the fact that the interest rate on subsidized 
Stafford loans is slated to increase in a few short weeks while 
House and Senate Democrats play political games with students' 
financial aid. This shortsighted approach is insulting to 
students and their families.
    By taking the student loan interest rate problem off the 
table, the committee can turn its attention to the 
reauthorization of the Higher Education Act and explore more 
effective ways to streamline and simplify federal student aid 
programs, review efforts to promote student access and 
affordability, and discuss opportunities to reduce the 
regulatory burden on colleges and universities.

Conclusion

    Politicians should not be in the business of setting 
student loan interest rates. This shortsighted practice only 
creates more uncertainty for borrowers and their families in 
the long run, leaving interest rates subject to campaign 
promises and the whims of Washington. The Smarter Solutions for 
Students Act moves all Stafford loans, including both 
subsidized and unsubsidized loans, to a single variable 
interest rate, simplifying financial aid for students and their 
families. It reduces the volatility of subsidies paid for by 
taxpayers, stabilizes our federal student loan programs, and 
serves the best interests of students, parents, and taxpayers.

                      Section-by-Section Analysis

Section 1. Short title

    States the short title as the ``Smarter Solutions for 
Students Act.''

Section 2. Student loan interest rates

    Amends Section 455(b) of the Higher Education Act of 1965 
to set the formula for interest rates on new federal student 
loans issued on or after July 1, 2013. Rates are to vary 
annually based on the 10-year Treasury note plus 2.5 percent 
for all Stafford loans and 4.5 percent for all PLUS loans. 
Rates are not to exceed 8.5 percent on Stafford loans and 10.5 
percent on PLUS loans.

Section 3. Budgetary effects

    States that the budgetary effects of the act shall not be 
entered into any PAYGO scorecard.

                       Explanation of Amendments

    The amendments, including the amendment in the nature of a 
substitute, are explained in the body of this report.

              Application of Law to the Legislative Branch

    Section 102(b)(3) of Public Law 104-1 requires a 
description of the application of this bill to the legislative 
branch. H.R. 1911 provides market-based interest rates for 
certain federal student loans.

                       Unfunded Mandate Statement

    Section 423 of the Congressional Budget and Impoundment 
Control Act (as amended by Section 101(a)(2) of the Unfunded 
Mandates Reform Act, P.L. 104-4) requires a statement of 
whether the provisions of the reported bill include unfunded 
mandates. This issue is addressed in the CBO letter.

                           Earmark Statement

    H.R. 1911 does not contain any congressional earmarks, 
limited tax benefits, or limited tariff benefits as defined in 
clause 9 of House Rule XXI.

                            Roll Call Votes

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee Report to include for 
each record vote on a motion to report the measure or matter 
and on any amendments offered to the measure or matter the 
total number of votes for and against and the names of the 
Members voting for and against.

                             Correspondence

    Exchange of letters with the Committee on the Budget.
    
    
         Statement of General Performance Goals and Objectives

    In accordance with clause 3(c) of House Rule XIII, the goal 
of H.R. 1911 is to provide for market-based interest rates for 
certain federal student loans. The Committee expects the 
Department of Education to comply with these provisions and 
implement the changes to the law in accordance with this stated 
goal.

                    Duplication of Federal Programs

    No provision of H.R. 1911 establishes or reauthorizes a 
program of the Federal Government known to be duplicative of 
another Federal program, a program that was included in any 
report from the Government Accountability Office to Congress 
pursuant to section 21 of Public Law 111-139, or a program 
related to a program identified in the most recent Catalog of 
Federal Domestic Assistance.

                  Disclosure of Directed Rule Makings

    The Committee estimates that enacting H.R. 1911 does not 
specifically direct the completion of any specific rule makings 
within the meaning of 5 U.S.C. 551.

  Statement of Oversight Findings and Recommendations of the Committee

    In compliance with clause 3(c)(1) of rule XIII and clause 
2(b)(1) of rule X of the Rules of the House of Representatives, 
the Committee's oversight findings and recommendations are 
reflected in the body of this report.

               New Budget Authority and CBO Cost Estimate

    With respect to the requirements of clause 3(c)(2) of rule 
XIII of the Rules of the House of Representatives and section 
308(a) of the Congressional Budget Act of 1974 and with respect 
to requirements of clause 3(c)(3) of rule XIII of the Rules of 
the House of Representatives and section 402 of the 
Congressional Budget Act of 1974, the Committee has received 
the following estimate for H.R. 1911 from the Director of the 
Congressional Budget Office:

                                     U.S. Congress,
                               Congressional Budget Office,
                                      Washington, DC, May 20, 2013.
Hon. John Kline,
Chairman, Committee on Education and the Workforce,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 1911, the Smarter 
Solutions for Students Act.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Deborah 
Kalcevic.
            Sincerely,
                                              Douglas W. Elmendorf.
    Enclosure.

H.R. 1911--Smarter Solutions for Students Act

    Summary: H.R. 1911 would change the interest rates for all 
new federal loans to students and parents made on or after July 
1, 2013, from a fixed interest rate set in statute to a 
variable interest rate, adjusted annually. Under the bill, 
interest rates for all new subsidized and unsubsidized student 
loans would be based on the interest rate on a 10-year Treasury 
note plus 2.5 percentage points, with a cap of 8.5 percent. 
(Borrowers pay no interest on subsidized loans while enrolled 
in school or during other deferment periods but are responsible 
for interest at all times on unsubsidized loans.) The interest 
rate for all new GradPLUS and parent loans would be based on 
the interest rate on a 10-year Treasury note plus 4.5 
percentage points, with a cap of 10.5 percent. The bill also 
would eliminate the cap on the interest rate on all new 
consolidation loans (multiple loans for a single borrower 
combined into one loan) originated on or after July 1, 2013.
    Under current law, all subsidized and unsubsidized loans 
originated on or after July 1, 2013, will have a fixed interest 
rate of 6.8 percent, and all GradPLUS and parent loans will 
have a fixed rate of 7.9 percent. In addition, the interest 
rate on all consolidation loans is capped at 8.25 percent.
    CBO estimates that enacting H.R. 1911 would reduce direct 
spending by about $1.0 billion over the 2013-2018 period and by 
$3.7 billion over the 2013-2023 period. Enacting the bill would 
not affect revenues. Pay-as-you-go procedures apply because 
enacting the legislation would affect direct spending. 
Implementing the bill would not have a significant impact on 
spending subject to appropriation.
    H.R. 1911 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA).
    Estimated cost to the Federal Government: The estimated 
budgetary impact of H.R. 1911 is shown in the following table. 
The costs of this legislation fall within budget function 500 
(education, training, employment, and social services).

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                                                                                                      By fiscal year, in millions of dollars--
                                                  ----------------------------------------------------------------------------------------------------------------------------------------------
                                                      2013       2014       2015       2016       2017       2018       2019       2020       2021       2022       2023    2013-2018  2013-2023
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                                                                                   CHANGES IN DIRECT SPENDING
 
Estimated Budget Authority.......................      3,870      1,495     -1,815     -2,010     -1,690     -1,355     -1,000       -670       -420       -255       -145     -1,505     -3,995
Estimated Outlays................................      2,195      2,030       -565     -1,720     -1,610     -1,325     -1,020       -725       -480       -305       -195       -995     -3,720
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

    Basis of estimate: As required under the Federal Credit 
Reform Act of 1990, most of the costs of the federal student 
loan programs are estimated on a net-present-value basis. Under 
credit reform, the present value of all loan-related cash flows 
is calculated by discounting those expected cash flows to the 
year of disbursement, using the rates for comparable maturities 
on U.S. Treasury borrowing. (For example, the cash flow for a 
one-year loan is discounted using the rate for a one-year zero-
coupon Treasury note.) The costs for the federal administration 
of student loans are estimated on a cash basis. For this 
estimate, CBO assumes the bill will be enacted by July 1, 2013.

Background on student loans

    The federal government currently administers four types of 
student loans:
     Stafford subsidized loans. Subsidized loans are 
available only to undergraduate students who demonstrate 
financial need. Borrowers pay no interest on those loans while 
they are enrolled in school or during other periods of 
deferment. The interest rate for subsidized loans is 3.4 
percent for academic year 2012-2013 but is scheduled to rise 
under current law to 6.8 percent for academic year 2013-2014 
and thereafter. The annual and aggregate amounts a student may 
borrow are limited by the borrower's year in school and 
dependency status.
     Stafford unsubsidized loans. Unsubsidized loans 
are available to undergraduate and graduate students regardless 
of financial need. Borrowers are responsible for interest on 
those loans at all times. Under current law, the interest rate 
for subsidized loans is 6.8 percent and will remain 6.8 percent 
in the future. The annual and aggregate amounts a student may 
borrow are limited by the borrower's year in school, dependency 
status, and the amount borrowed under the subsidized loan 
program.
     GradPLUS loans. GradPLUS loans are loans 
specifically for graduate students who wish to borrow above the 
annual or aggregate limits on unsubsidized student loans. Under 
current law, the interest rate on GradPLUS loans is 7.9 percent 
and will remain so. Students may borrow up to the cost of 
attendance at their institution (minus any other financial aid 
received).
     Parent loans. Parent loans are available to 
parents of students. Under current law, the interest rate on 
PLUS loans is 7.9 percent and will remain so. Parents may 
borrow up to the cost of attendance at their institution (minus 
any other financial aid received).
    In addition, under current law, borrowers with multiple 
loans can consolidate all of their loans into a single loan 
with a fixed interest rate. That rate is based on a weighted 
average of the rates of all loans that are consolidated, 
rounded up to the nearest one-eighth of one percent with a cap 
of 8.25 percent.

Direct spending

    Under H.R. 1911, the interest rate for all four types of 
loans would adjust annually based on the last auction of 
Treasury rates in May of each year for the upcoming academic 
year (July 1 through June 30). As of the date of this estimate, 
that auction for 2013 has not occurred. Accordingly, this 
estimate uses CBO's projection of the rate for the 10-year 
Treasury note in 2013. The estimated costs of the legislation 
would change once that auction has taken place and CBO knows 
what the actual rate for academic year 2013-2014 will be.
    Under the bill, the interest rates for all new subsidized 
and unsubsidized student loans would be equal to the interest 
rate on the 10-year Treasury note plus 2.5 percentage points, 
with a cap of 8.5 percent. Including the effect of the cap of 
8.5 percent, which lowers the expected value of future interest 
rates, CBO projects that interest rates for those loans would 
rise from about 5 percent for academic year 2014-2015 (below 
the fixed rate of 6.8 percent in current law) to about 7 
percent for academic year 2023-2024.
    Also under the bill, the interest rate for all new GradPLUS 
and parent loans would be based on the interest rate on a 10-
year Treasury note plus 4.5 percentage points, with a cap of 
10.5 percent. CBO projects that interest rates for those loans 
would rise from about 7 percent for academic year 2014-2015 
(below the fixed rate of 7.9 percent in current law) to about 9 
percent for academic year 2023-2024, which also includes the 
effect of the cap of 10.5 percent.
    In addition, the bill would eliminate the cap of 8.25 
percent on all consolidation loans originated as of July 1, 
2013, regardless of when the initial loans being consolidated 
were originated.
    CBO also projects that as interest rates rise above the 
level in current law, some borrowers, particularly those in the 
GradPLUS and parent loan programs, would reduce the amount of 
their federal borrowing. By 2023, CBO estimates that the volume 
in GradPLUS and parent loan programs would decline by about 15 
percent under H.R. 1911.
    Based on the changes in interest rates and loan volume, CBO 
estimates that enacting H.R. 1911 would increase direct 
spending by $2.2 billion in fiscal year 2013 and decrease 
direct spending by about $1.0 billion over the 2013-2018 period 
and by $3.7 billion over the 2013-2023 period.
    Pay-As-You-Go considerations: The Statutory Pay-As-You-Go 
Act of 2010 establishes budget-reporting and enforcement 
procedures for legislation affecting direct spending or 
revenues. The net changes in outlays and revenues that are 
subject to those pay-as-you-go procedures are shown in the 
following table.

                          CBO ESTIMATE OF PAY-AS-YOU-GO EFFECTS FOR H.R. 1911 AS ORDERED REPORTED BY THE HOUSE COMMITTEE ON EDUCATION AND THE WORKFORCE ON MAY 14, 2013
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                      By fiscal year, in millions of dollars--
                                                  ----------------------------------------------------------------------------------------------------------------------------------------------
                                                      2013       2014       2015       2016       2017       2018       2019       2020       2021       2022       2023    2013-2018  2013-2023
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                           NET INCREASE OR DECREASE (-) IN THE DEFICIT
 
Statutory Pay-As-You-Go Impact...................      2,195      2,030       -565     -1,720     -1,610     -1,325     -1,020       -725       -480       -305       -195       -995     -3,720
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

    Intergovernmental and private-sector impact: H.R. 1911 
contains no intergovernmental or private-sector mandates as 
defined in UMRA and would not affect the budgets of state, 
local, or tribal governments.
    Estimate prepared by: Federal costs: Deborah Kalcevic; 
Impact on state, local, and tribal governments: J'nell L. 
Blanco; Impact on the private sector: Vi Nguyen.
    Estimate approved by: Peter H. Fontaine, Assistant Director 
for Budget Analysis.

                        Committee Cost Estimate

    Clause 3(d)(1) of rule XIII of the Rules of the House of 
Representatives requires an estimate and a comparison of the 
costs that would be incurred in carrying out H.R. 1911. 
However, clause 3(d)(2)(B) of that rule provides that this 
requirement does not apply when the Committee has included in 
its report a timely submitted cost estimate of the bill 
prepared by the Director of the Congressional Budget Office 
under section 402 of the Congressional Budget Act.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman):

HIGHER EDUCATION ACT OF 1965

           *       *       *       *       *       *       *

TITLE IV--STUDENT ASSISTANCE

           *       *       *       *       *       *       *

PART D--WILLIAM D. FORD FEDERAL DIRECT LOAN PROGRAM

           *       *       *       *       *       *       *

SEC. 455. TERMS AND CONDITIONS OF LOANS.

  (a) * * *
  (b) Interest Rate.--
          (1) * * *

           *       *       *       *       *       *       *

          (7) Interest rate provision for new loans on or after 
        july 1, 2006, and before july 1, 2013.--
                  (A) Rates for fdsl and fdusl.--
                Notwithstanding the preceding paragraphs of 
                this subsection, for Federal Direct Stafford 
                Loans and Federal Direct Unsubsidized Stafford 
                Loans for which the first disbursement is made 
                on or after July 1, 2006, and before July 1, 
                2013, the applicable rate of interest shall be 
                6.8 percent on the unpaid principal balance of 
                the loan.
                  (B) PLUS loans.--Notwithstanding the 
                preceding paragraphs of this subsection, with 
                respect to any Federal Direct PLUS loan for 
                which the first disbursement is made on or 
                after July 1, 2006, and before July 1, 2013, 
                the applicable rate of interest shall be 7.9 
                percent on the unpaid principal balance of the 
                loan.
                  (C) Consolidation loans.--Notwithstanding the 
                preceding paragraphs of this subsection, any 
                Federal Direct Consolidation loan for which the 
                application is received on or after July 1, 
                2006, and before July 1, 2013, shall bear 
                interest at an annual rate on the unpaid 
                principal balance of the loan that is equal to 
                the lesser of--
                          (i) * * *

           *       *       *       *       *       *       *

          (8) Interest rate provision for new loans on or after 
        july 1, 2013.--
                  (A) Rates for fdsl and fdusl.--
                Notwithstanding the preceding paragraphs of 
                this subsection, for Federal Direct Stafford 
                Loans and Federal Direct Unsubsidized Stafford 
                Loans for which the first disbursement is made 
                on or after July 1, 2013, the applicable rate 
                of interest shall, during any 12-month period 
                beginning on July 1 and ending on June 30, be 
                determined on the preceding June 1 and be equal 
                to--
                          (i) the high-yield 10-year Treasury 
                        notes auctioned at the final auction 
                        held prior to such June 1; plus
                          (ii) 2.5 percent,
                except that such rate shall not exceed 8.5 
                percent.
                  (B) PLUS loans.--Notwithstanding the 
                preceding paragraphs of this subsection, for 
                any Federal Direct PLUS Loan for which the 
                first disbursement is made on or after July 1, 
                2013, the applicable rate of interest shall, 
                during any 12-month period beginning on July 1 
                and ending on June 30, be determined on the 
                preceding June 1 and be equal to--
                          (i) the high-yield 10-year Treasury 
                        notes auctioned at the final auction 
                        held prior to such June 1; plus
                          (ii) 4.5 percent,
                except that such rate shall not exceed 10.5 
                percent.
                  (C) Consolidation loans.--Notwithstanding the 
                preceding paragraphs of this subsection, any 
                Federal Direct Consolidation Loan for which the 
                application is received on or after July 1, 
                2013, shall bear interest at an annual rate on 
                the unpaid principal balance of the loan that 
                is equal to the weighted average of the 
                interest rates on the loans consolidated, 
                rounded to the nearest higher one-eighth of one 
                percent.
          [(8)] (9) Repayment incentives.--
                  (A) * * *

           *       *       *       *       *       *       *

          [(9)] (10) Publication.--The Secretary shall 
        determine the applicable rates of interest under this 
        subsection after consultation with the Secretary of the 
        Treasury and shall publish such rate in the Federal 
        Register as soon as practicable after the date of 
        determination.

           *       *       *       *       *       *       *

                             MINORITY VIEWS

                                OVERVIEW

    Committee Democrats adamantly oppose H.R. 1911, the Smarter 
Solutions for Students Act. Under the guise of addressing the 
coming July 1 increase in interest rates for subsidized 
Stafford loans, the bill alters interest rate calculations for 
all loans and makes college education more expensive for 
American students and their families. In fact, instead of 
offering a solution to the interest rate hike, the bill makes 
matters worse. Congress should act to stop the interest rate 
hike in the short-term and find longer term solutions to 
reduce, not exacerbate, the cost of attending college.
    Student loan debt now exceeds $1.1 trillion in total, and 
the Federal Reserve has found that student debt now surpasses 
aggregate auto loan, credit card and home equity debt. Only 
debt on home mortgages is greater than student debt. Increasing 
student loan debt is not just a burden carried by individuals, 
but also a drag on our economy. Graduates with high levels of 
debt cannot afford to fully participate in the economy. Student 
loan debt affects a range of life choices, from where they live 
to their ability to buy a car, own a home or start a family.

         H.R. 1911 THE GOP BILL WORSE THAN DOING NOTHING AT ALL

    According to the Congressional Budget Office (CBO), H.R. 
1911 will set students further back by increasing the interest 
rates they pay for student loans.\1\ The Republican proposal 
seemingly offers lower rates to students next year; however, 
those rates are highly variable. That is, the rates on the same 
loans will change year-to-year, leading to higher interest 
rates that will be more than double the rates that millions are 
paying today.
---------------------------------------------------------------------------
    \1\http://democrats.edworkforce.house.gov/press-release/gop-
student-loan-bill-would-make- college-more-expensive-new-independent-
nonpartisan.
---------------------------------------------------------------------------
    CRS found that students and families would pay higher 
interest costs under the Republican proposal than they would 
even if Congress took no action and interest rates doubled as 
scheduled for the neediest students in July. The figures below 
are based on a standard repayment period of ten years:
     Students who borrow the maximum amount of 
subsidized Stafford loans over five years would pay $10,109 in 
interest payments under the Republican bill, $4,174 if rates 
were kept at 3.4 percent or $8,808 if rates are allowed to 
double to 6.8 percent in July. Freshman starting next year 
would initially receive 4.4% loans only to have them skyrocket 
to almost 8% by the time they start to repay.
     Students who borrow the maximum amount of 
subsidized and unsubsidized Stafford loans over five years 
would pay $14,430 in interest under the Republican bill, 
$12,598 if subsidized loans were allowed to double in July, or 
$7,965 if rates don't double.
     Parents and graduate students would also pay more 
under the Republican bill. For instance, a parent who borrows 
the maximum amount for their child over five years would face 
$35,848 in interest payments under the Republican bill, more 
than the $27,956 under current law.
    These added costs are a function of the markup that H.R. 
1911 adds to 10-year treasuries to establish an interest rate 
and the variability of those rates from year to year. Using 
CBO's projections, those interest rates quickly climb above 
current law's 6.8% rate for Stafford loans and 7.9% for PLUS 
loans.

------------------------------------------------------------------------
                                   Proposed Stafford
                                     Loan Interest    Proposed PLUS Loan
           Fiscal Year             Rates Under H.R.     Interest Rates
                                         1911           Under H.R. 1911
------------------------------------------------------------------------
2013............................                4.4                 6.4
2014............................                5.0                 7.0
2015............................                5.7                 7.7
2016............................                6.6                 8.6
2017............................                7.4                 9.4
2018............................                7.7                 9.7
2019............................                7.7                 9.7
2020............................                7.7                 9.7
2021............................                7.7                 9.7
2022............................                7.7                 9.7
2023............................                7.7                 9.7
------------------------------------------------------------------------

    Republicans' H.R. 1911 will allow interest rates to more 
than double for the neediest students. Under Kline's plan, an 
incoming freshman next year who makes full use of the 
Subsidized Stafford loan program will likely enter repayment in 
2018 and will have a 7.7% interest rate on all of their loans.
    H.R. 1911 will increase interest rates for millions of 
borrowers above current fixed rates for 7 of the next 10 years. 
A parent or graduate student borrowing PLUS Loans next year 
would initially have a 6.4% rate. However, in 2016, three years 
later, that rate will increase to 8.6%.

 REPUBLICAN H.R. 1911 WILL INCREASE STUDENT DEBT FOR DEFICIT REDUCTION

    To further confirm how detrimental H.R. 1911 is to students 
and their families, the Congressional Budget Office recently 
calculated that that the Republican bill will cost students and 
parents $3.7 billion in additional student loan interest 
charges over the next 10 years.\2\ That increased student loan 
debt is directed to the deficit. Republicans want to solve the 
potential consequences of the national debt on our children by 
placing almost $4 billion immediately on the backs of students 
before they may have received their first job or paycheck.
---------------------------------------------------------------------------
    \2\Ibid.
---------------------------------------------------------------------------

 REPUBLICAN H.R. 1911 FURTHER DEEPENS THE COLLEGE DEBT CRISIS, ALREADY 
                         TOPPING $1.1 TRILLION.

    Saddling students with higher interest rates means the GOP 
is adding billions to the crushing debt already carried by 
college students and their families. Increased debt burdens 
make it harder for graduates to fully participate in the 
economy.
    Evidence of this trend is supported by data from the U.S. 
Census Bureau that shows nearly 6 million Americans ages 25 to 
34 lived with their parents in 2011, up from 4.7 million 
reported in 2007.\3\ A recent report by the Consumer Financial 
Protection Bureau (CFPB) suggests the reduction in young people 
buying their first home is caused in part by high student debt 
levels that don't leave sufficient resources necessary to start 
a new family.\4\ The National Association of Realtors has also 
documented a decrease in first-time homebuyers--they are now 
only 30% of the market compared to historical levels of 40%.\5\
---------------------------------------------------------------------------
    \3\Random Samplings: Households Doubling Up. U.S. Census Bureau. 
http://blogs.census.gov/2011/09/13/households-doubling-up/.
    \4\Student Loan Affordability. Consumer Financial Protection 
Bureau. http://www.consumerfinance.gov/reports/student-loan-
affordability/.
    \5\First-Time Home Buyers: 31 Percent of Residential Buyers. 
National Association of Realtors. http://
economistsoutlook.blogs.realtor.org/2012/09/27/first-time-home-buyers-
31-percent-of-residential-buyers/.
---------------------------------------------------------------------------
    This reversal of purchasing by college graduates with debt 
is true with motor vehicles as well. According to the Federal 
Reserve, college graduates funded auto purchases at a rate 3 to 
4 percentage points greater than their non-college peers in the 
past. Today these student borrowers were actually less likely 
to hold auto debt.\6\
---------------------------------------------------------------------------
    \6\Young Student Loan Borrowers Retreat from Housing and Auto 
Markets. Federal Reserve Bank of New York. http://
libertystreeteconomics.newyorkfed.org/2013/04/young-student-loan-
borrowers-retreat-from-housing-and-auto-markets.html
---------------------------------------------------------------------------
    A recent report by the CFPB confirmed that spiraling 
student debt is having profoundly negative consequences for the 
economy in many ways in addition to home ownership. For 
example, many comments to the CFPB suggested student debt ``may 
suppress risk-taking and innovation by discouraging the 
formation of new business by young entrepreneurs.'' The report 
also documents concern that higher student debt is leading to 
fewer young people going into the teaching profession, and is 
altering the nature of rural communities by creating obstacles 
for student borrowers from returning to rural communities after 
college.\7\
---------------------------------------------------------------------------
    \7\Student Loan Affordability. Consumer Financial Protection 
Bureau. http://www.consumerfinance.gov/reports/student-loan-
affordability/.
---------------------------------------------------------------------------
    The Kline bill exacerbates these harmful economic trends by 
piling on billions of dollars more in student loan debt.
    It should be noted that, in the FY14 budget, the Obama 
Administration called for a long-term variable student loan 
change. Chairman Kline has suggested his bill is very similar 
to the Obama proposal, but, in fact, there are stark 
differences. For example, the President's proposal provides 
lower interest rates than the Kline bill. Those rates are 
variable, but they are fixed for the life of any loan, rather 
than variable for the same loan year-to-year as in H.R. 1911. 
The President's proposal also expands income-based repayment 
programs to all borrowers, whereas the Kline bill provides for 
no repayment assistance.
    The White House summed up its differences with H.R. 1911:

          While we welcome action by the House on student 
        loans, we have concerns about an approach that both 
        fails to guarantee low rates for students on July 1 and 
        asks too many of them to bear the burden of deficit 
        reduction through unaffordable rates.

    The voices of student and education groups have also been 
heard. As the Education Trust and the Institute for College 
Access and Success has explained:

          While appearing to offer low rates for new borrowers, 
        [H.R. 1911] does not make federal loans more 
        affordable. In fact, it makes them much more costly for 
        students, with variable rates on undergraduate loans 
        that are projected to rise nearly three percentage 
        points (to 7.36%) by the time this fall's freshmen 
        graduate from college and make their first loan 
        payment.

    A coalition of student groups has weighed in with their 
opposition:

          This proposal [H.R. 1911] would lock in high 
        revenues, and takes another $3.7 billion for further 
        deficit reduction. We should not increase student debt 
        to pay down the deficit.

                  DEMOCRATIC VISION FOR STUDENT LOANS

    It's in our national interest to work toward solving the 
$1.1 trillion student loan debt problem. Democrats on the 
committee believe that any student loan bill should provide a 
benefit to student loan borrowers in the form of lower rates 
and lower total debt, not make a college education more 
expensive. Student and education groups wrote in support of 
Democratic amendments and in opposition to H.R. 1911. However, 
Republicans unanimously voted against the amendments.
    Committee Democrats believe there must be a balanced long-
term solution for student loan interest rates and student loan 
debt. There are many options Congress could, and should, 
consider in order to promote an affordable and accessible 
education. A balanced solution should take time to consider all 
borrowers and the obstacles each face before college, in 
college and after college repaying their loans. This process 
will take time and can best be handled in a full 
reauthorization of the Higher Education Act, due to expire in 
two years.
    Representative Courtney offered an amendment to freeze 
subsidized Stafford loans at 3.4% for two years. The Courtney 
amendment would have ensured interest rates do not double for 
the neediest students. By extending low rates for two years, 
the Committee would have time to thoroughly examine long-term 
solutions that can properly balance affordability, access, 
completion and repayment while reauthorizing the Higher 
Education Act.
    Representative Tierney offered an amendment to set Stafford 
loan interest rates to the rate given to the nation's big banks 
for two years. The Tierney amendment would have directed the 
Secretary of Education to set student loan interest rates on 
all Stafford loans yearly to the rates given to the nation's 
largest banks by the Federal Reserve through the `discount 
window'. Current rates provided to the largest banks are set at 
0.75%. A version of this bill was introduced by Senator 
Elizabeth Warren (D-MA).
    Regrettably, these amendments were rejected by the 
Committee Republicans. The current bill therefore fails a very 
simple test. It makes college education more expensive for 
American students and their families. That exacerbates a long-
term problem. It is not a long-term solution.

                                   George Miller.
                                   Robert C. Scott.
                                   Carolyn McCarthy.
                                   Rush Holt.
                                   Raul M. Grijalva.
                                   David Loebsack.
                                   Marcia L. Fudge.
                                   Gregorio Kilili Sablan.
                                   Frederica S. Wilson.
                                   Robert E. Andrews.
                                   Ruben Hinojosa.
                                   John F. Tierney.
                                   Susan A. Davis.
                                   Timothy H. Bishop.
                                   Joe Courtney.
                                   John A. Yarmuth.
                                   Suzanne Bonamici.

                                  

```