Watch Senator Mike Lee on Fox News Sunday:
I’m Mike Lee of Utah. Today, the House of Representatives passed my bill to overhaul the student loan system. Instead of paying back on a fixed date based on when they borrow, we’d allow those in good standing to pay 10 percent of their income with each additional year. We’d allow them to take a loan in exchange for a 10-year low interest rate, plus a 6-percent bonus if they stay in school for longer than two years. It would be a clean bill without Obamacare-like spending, and it does not reduce access to Pell Grants or any other federal student aid programs. We should pass this bill, immediately, and send it to the president’s desk.
One potential problem with this plan is it could encourage more students to attend a particular college or vocational school. People can choose the college that is right for them, whether its a liberal arts college or a medical school. The benefits of a good education will not be lost if they choose to stay in school one year longer. Also, schools that are great for raising more money may be difficult to compete with those that can provide students with a great education.
Again, if a student is in good standing with their loans, that’s what matters. As long as students are making good academic progress and the debt is manageable, it’s fine.
The problem with my bill is that there are no tax incentives available to the student. It is merely changing a system in which the government taxes people for borrowing and keeps track of when they pay their bills. It’s good to pay back later on a fixed date. It would save people hundreds of dollars annually. But the problem is, we can’t take out a new loan every two years. What happens if you enroll in a really expensive law school and decide you want to change majors? It would be completely unfair to force students to pay off their loans if they change their mind after four years, especially since they have already paid for some of their education.
In addition, the president could decide he wants all of the benefits of my bill, but the president doesn’t have to sign my bill. There are plenty of Congress members who are looking to get something out of this bill. They say if it goes to a conference committee, that there will be provisions to make it harder for someone like the president to achieve their dreams of a college degree. Again, there are lots of good reasons to do this, but the president should not be able to pick and choose which provisions are preserved and which ones are destroyed.