News Release — Sen. Bernie Sanders, I-Vt.
July 23, 2013
WASHINGTON -– Sen. Bernie Sanders (I-Vt.) said a White House report today masks a big boost in college loan interest rates that would be in store for students and parents under a White House-backed bill now before the Senate.
“The White House is being disingenuous and is trying to sweep under the rug big increases in interest rates for students and parents in the near future,” Sanders said. “Because college costs are out of control and interest rates are rising, students are leaving college deep in debt or in some cases choosing not to continue their education because they cannot afford it,” Sanders added.
A member of the Senate education committee, Sanders disputed the White House report released today. He said the White House glossed over Congressional Budget Office projections that interest rates would hit 7.25 percent for undergraduate loans in five years. By 2018, graduate loans would hit 8.8 percent and parents would be charged 9.8 percent on college loans, according to the analysis by the non-partisan agency that provides economic data for Congress.
The White House proposal is similar to legislation already passed by the House of Representatives.
Scott Giles, the president and CEO of the Vermont Student Assistance Corp., has criticized both plans. “The proposals … do not reduce the government profit on education loans. Instead, under the guise of letting the market set rates, they temporarily reduce rates for some borrowers while increasing rates on others,” he wrote in a newspaper op-ed.
In Vermont, the average debt for a student graduating from a four-year college is about $28,000, a sum greater than the national average. “Vermonters I talk to want us to make college more affordable, not more expensive,” Sanders said. “As VSAC said, the proposals before Congress would make a bad situation worse.”
The Senate is expected to vote this week on the White House-backed student loan proposal.
Sanders has proposed an amendment that would place a two-year limit on the deal. Adding a so-called sunset provision would give Congress time to focus on ways to make college more affordable before economists expect the significant interest rate increases to take effect. The Senate education committee is scheduled next year to take up legislation to reauthorize the Higher Education Act.