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Republicans Urge Long-Term Student Loan Interest Rate Fix

House Education and the Workforce Committee Republicans today sent a letter to President Obama urging a fiscally responsible, long-term solution to the Stafford Loan interest rate problem. Chairman John Kline (R-MN), Subcommittee on Higher Education and Workforce Training Chairwoman Virginia Foxx (R-NC), and Reps. Thomas Petri  (R-WI), Joe Wilson (R-SC), Phil Roe (R-TN), Glenn “GT” Thompson (R-PA), Tim Walberg (R-MI), Matt Salmon (R-AZ), Scott DesJarlais (R-TN), Todd Rokita (R-IN), Larry Bucshon (R-IN), Lou Barletta (R-PA), Martha Roby (R-AL), Joe Heck  (R-NV), and Susan Brooks (R-IN) signed the letter.

“We cannot continue kicking the can down the road, creating confusion and uncertainty for student loan borrowers,” Chairman Kline said. “The Stafford Loan interest rate problem was manufactured here in Washington, and we have a responsibility to craft a long-term solution to fix it. It’s time to tie interest rates to the free market, not the whims of politicians.”

In 2012, lawmakers approved a proposal to delay for one year a scheduled interest rate increase on subsidized Stafford Loans made to undergraduate students. Unless Congress takes action, the interest rate will jump from 3.4 percent to 6.8 percent on June 30, 2013.

In the letter, the Republican committee members write:

Too often, Congress must scramble to craft short-term fixes for long-term problems, a dynamic particularly evident in federal student aid programs. Last year, Congress chose to delay for one year the scheduled interest rate increase under the premise that we would use the time to develop a permanent solution to the problem. As the June 30 deadline nears, it is time for us to work together on a sustainable solution to ensure students have the certainty they need to plan for the cost of attending college.

We support resolving the interest rate cliff by moving toward a market-based interest rate for Stafford loans in a fiscally responsible manner, and are interested in the administration’s ideas. As such, we request an outline of the proposal you plan to include in the fiscal year 2014 budget request that provides a long-term solution to the student loan interest rate issue and requisite offsets to ensure taxpayers will not be forced to bear the burden of fixing this problem.

To read the full letter, click here.

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