Nebraskans may recall last summer’s partisan squabble over student loan rates, which were set to expire and subsequently rise on millions of college students across the nation at the height of the presidential campaign. 

It was the hope of many Americans, myself included, that the end of the last campaign would lead to, at a minimum, a decrease in the number of manufactured political battles – particularly fights over issues on which Republicans and Democrats agree.

Unfortunately, these hopes appear to be dashed for the moment when it comes to finding a permanent, bipartisan solution to help families afford college.

In a recent New York Times opinion piece, my Senate colleagues Lamar Alexander (R-Tenn.), Tom Coburn (R-Okl.), and Richard Burr (R-N.C.) rightly noted that, “this summer, more than nine million undergraduates will take out an average of $6,700 each in federal loans to pay for college next year. They will borrow, on average, $24,803 to earn their degrees.”

With over half of recent college graduates jobless or underemployed, paying back this mountain of student debt is an increasingly tall order.

As many families with college students know all too well, subsidized and unsubsidized loans are forms of federal aid for eligible students to help cover the cost of higher education at a four-year college or university, community college, or trade, career, or technical school. 

The government pays the interest on these need-based loans while a borrower is in
school at least half-time, during a six-month grace period after leaving school, or during a period of deferment. This leads us to the current dilemma. 

Last time the current 3.4 percent interest rate was extended for students, it cost the taxpayers over $5.9 billion. Importantly, this rate extension affected only subsidized Stafford loans while allowing other rates to remain artificially high. If Congress fails to act by July 1, the interest rate on subsidized federal Stafford loans will also soar, doubling to 6.8 percent – an arbitrary rate.

Republicans in the House and Senate, along with President Obama, have put forward proposals to move Stafford loans to a market-based interest rate to tie interest rates to
economic conditions. I support such a solution, specifically the plan offered by Senators Alexander, Coburn, Burr, and Isakson, which would ensure low interest rates for all federal student loans, not just a select few.

Any student who takes out a loan at a market rate – which is projected to remain well below 6.8 percent for the next decade – would lock-in that low rate for the life of the loan. Taxpayers would also be protected because as the economy recovers, the burden of subsidizing artificially low interest rates would ease.

What’s amazing here is that Republicans and many Democrats – including President Obama – agree on this way forward. As my colleagues noted in the Times, “all of us embrace the same idea: we should stop playing politics with student loan debt and move to a simpler and fairer system, one that will immediately lower borrowing costs for all students while protecting taxpayers and providing certainty for the future.”

But unfortunately, some of my colleagues in the Senate are rejecting a market-based
interest rate in favor of another one-year extension of the current rate. 

Without question, this is just another temporary fix paid for with a permanent tax hike. And next June, we’d find ourselves in the same position: another summer, another manufactured student loan crisis – all to score political points.

Instead, I support real reform to ensure hardworking students have access to higher education and middle class families can have more certainty when they plan for the financing of their children’s education. 

Nebraskans are tired of partisan squabbles. It’s time to put election-year politics aside and start making good policy. Thank you for taking part in our democratic process, and I’ll visit with you again next week.