Mr. Speaker, I rise in opposition to H.R. 1911, the Smarter Solutions for Students Act because this bill becoming law would be worse than allowing student loan interest rates to double on July 1, 2013.
If Congress does nothing the student loan interest rate will rise from 3.4 percent to 6.8 percent on July 1st. As Members of the Congress, we know what this will mean for students in our states and what it will mean for colleges and universities in our Congressional Districts.
The bill H.R. 1911 does not fix the problem of higher interest rates for student loans, but places a greater financial burden on young professionals just starting out in life. The Treasury 10 year rate over the last several years is abnormally low due to the weak economy, but in years when the economy was strong the rate was consistently above 6 percent or more. This is the rate that H.R. 1911 would use to calculate student loan repayment not over the life of the loan, but each time funds were provided.
I have a strong interest in how student loan repayment plans impact graduates. During the last Congress, I introduced the College Literacy in Finance and Economics Act of 2011 or College LIFE Act to address the challenges faced by African American and Hispanic students who sign loan agreements, but may not have the financial literacy to comprehend the significance of taking on long-term debt.
My bill directed that eligible institutions provide financial literacy counseling to borrowers within 45 days after students receive their loan.
Literacy counseling under the College LIFE Act would require: a minimum of two 4-hour counseling sessions, the first when a student receives a loan payment, and the second when student's complete their study.
The focus of financial literacy education under the College LIFE Act was to make sure students knew through counseling what they were agreeing to in signing up for and receiving a student loan.
Counseling would provide information on student education financial options that went beyond loans and included scholarships. Student financial literacy programs can provide insight into information on loan management and the basics of personal financial management.
The bill would have also provided financial education that taught students how to: make a budget, prioritize financial decision making related to how to balance income, expenses and personal spending, develop realistic goals based on income, and manage credit and debt.
Students would have learned how to understand credit scores, credit cards, and investing so that they could become better financial consumers.
The College LIFE Act would have benefited thousands of graduating students. In the City of Houston, this spring I have participated in commencement exercises for the University of Houston, Texas Southern University, Houston Community College and Lone Star College North Harris. There are thousands of new graduates just in the City of Houston alone who are ready to pursue their dreams, but who will wake up to the reality of tens of thousands of dollars in debt.
I am proud to call Texas Southern University a constituent of the 18th Congressional District of Houston Texas. Texas Southern University is the third largest Historically Black College and University in the Nation. I joined Texas Southern University's current president Dr. John Rudley at the school's commencement. Texas Southern University has a long proud history of success in the students it has sent forth.
The school was founded in September of 1927 with a loan from the Houston Public School Board. This was not a loan intended to saddle the school with a debt too great to survive. For this reason, along with hard work and the dedication of faculty, students and the Houston Community, the University will celebrate its 86th anniversary this year.
Texas Southern University's loan statistics for the 9700 students attending the school tells us why financial aid is important:
Eighty-one percent of the students attending the school receive some form of student financial assistance.
Texas Southern University received $85 million in student financial aid revenue for graduate and undergraduate students.
Due to a change in how the Department of Education determines eligibility for parent student loans, there are over 400 fewer students attending Texas Southern University this year.
Changes to student loan rules--no matter how minor--can result in major consequences for a young person's prospects for a college or university degree. A college degree can open up a world of opportunities that would otherwise not be available.
I spoke at Texas Southern University's commencement exercise and was pleased to be joined by Michael Strahan, a Texas Southern University Alum who is a co-host of Live with Kelly and Michael.
Not all Texas Southern University graduates are as famous as Michael Strahan, but many of them pursue careers that lead to personal and professional success. The goal of attending a university should and ought not to be gaining fame and fortune.
The outcome of our work in Congress should not result in crushing financial debt, because that will end the dreams of college for otherwise college-ready students.
In 2008, 62 percent of students who graduated with a baccalaureate degree left college with more than knowledge--they were burdened with debt. Students of every race, ethnicity, and gender struggle with loans.
According to 2008 statistics: 92 percent of African-American students, 85 percent of Hispanic students, 85 percent of Native American students, 82 percent of multiracial students, 80 percent of Native Hawaiian and Pacific Island students, 77 percent of white students, and 68 percent of Asian students received financial aid.
Education is the surest path out of poverty. However, if the changes proposed by H.R. 1911, that would amend the Higher Education Act of 1965 are allowed to become law, the cost of education will become more uncertain and much more costly.
The reason, I introduced the College LIFE Act was to deal with the issue of personal financial education that has to proceed or come as a requirement when students take on college education debt.
The bill directed that eligible institutions provide financial literacy counseling to borrowers within 45 days after students receive their loan.
The focus of the financial literacy education under the College LIFE Act was to make sure students knew what they were agreeing to in signing up for and receiving a student loan.
Counseling would provide information on student education financial options that went beyond loans and included scholarships. Student financial literacy programs can provide insight into information on loan management and the basics of personal financial management, such as how to make a budget, prioritizing income, expenses and personal spending, as well as how to develop realistic goals based on income.
These students would have also learned about credit and debt management by understanding the importance of credit scores. Counseling would make sure that students understood credit cards and investing.
The need for education from cradle to grave should be a national priority, not an afterthought. We know that the United States is behind in a wide array of areas related to Science Technology Engineering and Mathematics known as STEM education. The Republican leadership must make the national interest for STEM education a top priority.
Students who are graduating across the Nation are departing colleges and universities this spring with immense debt. Student borrowing is widespread with more than $100 billion in federal education loans distributed every year. In total student loan debt adds up to $1 trillion dollars. As a direct consequence of a weak economy more than ever, students and parents must rely upon loans to pay for higher education.
The only reliable way in today's economy to earn more is to learn more. During difficult economic times adults seek new careers by going back to school. Parents who want a better life for their children will take on college loan debt because the cost of education requires it.
This is a bad bill that will not solve the problem of out-of-control student loan debt. For the reasons stated, I urge my Colleagues to join me in voting no on this bill.