Congressman Young Silent on His Plan to Double Student Loan Interest Rates

INDIANAPOLIS – With less than a week to go before Election Day, Congressman Todd Young has yet to be honest with Hoosier students about his plans to cut their Pell Grants, increase their student debt, and make it more difficult to pay off student loans.

The plan Young bragged about would have eliminated access to Pell Grants for more than 32,000 Hoosier students and allowed student loan rates for Hoosiers to double from 3.4% to 6.8%. That’s nearly an additional $6,000 for the average Hoosier student with college debt, and more than a semester’s worth of tuition at IU, Purdue, Indiana State, and Ball State.

But it doesn’t stop there. Congressman Young also opposed allowing students to refinance their student loans to the lowest rates available, even though that would have reduced the student loan burden for thousands of Hoosiers. It’s well past time for Congressman Young to break his silence and give Hoosier students the answers they deserve about his out-of-touch plans. Here are a few of the questions he needs to answer:

– Why did you brag about helping to draft a plan that would double student loan interest rates for Hoosier students?

– Why did you vote to tie student loan rates to the ups and downs of the financial markets on Wall Street?

– Why did you vote against allowing students to refinance their student loans, which prevents many Hoosier students from paying back their debt at an affordable rate?

– Why would you vote to allow student loan rates to rise unchecked and create profits for lenders

– Why do you want to cut Pell Grant funding, which helps thousands of low-income Hoosiers afford a college education?

BACKGROUND:

YOUNG’S PLAN WOULD DOUBLE STUDENT LOAN INTEREST RATES…

Jasper Herald: Young “Helped To Draft” The House GOP Budget. “The House’s proposed budget, which Young helped to draft as a member of the House Budget Committee, proposes changes to those programs, such as turning the Medicaid program over to the states, which he said many governors are requesting, ‘and allowing them to find the most effective way of controlling costs.’” [Jasper Herald, 4/27/11]

  • Ryan Budget Would Have Allowed Student Loan Interest Rates To Double From 3.4 Percent To 6.8 Percent.“[T]he Ryan plan […] would allow student loan interest rates on new Stafford loans to double this July, from 3.4 percent to 6.8 percent.” [Education Votes, 3/20/13]
  • Ryan Budget Proposed Returning To Unsubsidized Federal Student Loans, Which Would Cause Interest Rates To Double.“3.4 percent (the government’s current subsidized interest rate for Stafford loans, which were established in 2007 and will expire in July if not renewed) versus 6.8 percent (the unsubsidized interest rate to which the Ryan budget proposed returning those loans). [New Republic,4/27/12]

…WHICH COULD HAVE INCREASED HOOSIER STUDENT DEBT PAYMENTS BY NEARLY $6,000 

The Average Indiana Student Owed $29,229 In Student Loan Debt. [The Institute For College Access & Success, Accessed 8/16/16]

An Increase In Loan Rates From 3.4 Percent To 6.8 Percent Would Result In An Increase In Cumulative Payment For Hoosier Students Of $5,842.78. [The Institute For College Access & Success, Accessed 8/16/16]

A $29,222 Loan Repaid Over 10 Years At A 6.8 Percent Interest Rate Would Result In A Total Cumulative Payment Of $40,354.41.According to org, a loan balance of $29,222 repaid over 10 years at a 6.8 percent interest rate would result in a total cumulative payment of $40,354.41. [FinAid.org, Loan Calculator, Accessed 9/10/16]

A $29,222 Loan Repaid Over 10 Years At A 3.4 Percent Interest Rate Would Result In A Total Cumulative Payment Of $34,511.63.According to org, a loan balance of $29,222 repaid over 10 years at a 3.4 percent interest rate would result in a total cumulative payment of $ 34,511.63. [FinAid.org, Loan Calculator, Accessed 9/10/16]

TODD YOUNG OPPOSES COMMON SENSE APPROACH TO TACKLING STUDENT LOAN DEBT

 2014: Young Effectively Voted Against Allowing Borrowers To Refinance Their Outstanding Student Loans At Current Borrowing Rates Through December 11, 2014. In September 2014, Young effectively voted against an amendment that, according to the Congressional Record, would have added the first two sections of H.R. 4582, the Bank on Students Emergency Loan Refinancing Act, to the underlying bill funding the government through December 11, 2014. According to a press release from one of that bill’s sponsors, Rep. John Tierney (D-MA), “The Bank on Students Emergency Refinancing Act would allow student loan borrowers with public or private loans who borrowed before 2013 to refinance their loans to the lower market-based rates established for students last summer in the Bipartisan Student Loan Certainty Act of 2013. Loans borrowed for undergraduate education would be refinanced to 3.86%; loans borrowed for graduate education would be refinanced to 5.41%; and loans borrowed by parents for their child’s education would be refinanced to 6.41%.” The proposed amendment would have sunset the student loan provisions on December 11, 2014. The vote was on a motion to recommit the bill and report it back with the specified amendment; the House rejected the motion by a vote of 199 to 228. [House Vote 508, 9/17/14; Congressional Record, 9/17/14; H.J.Res. 124, 9/17/14; Tierney press release, 5/6/14; Congressional Actions, H. J. Res. 124]

YOUNG VOTED TO TIE STUDENT LOAN RATES TO THE FINANCIAL MARKETS, WHICH COULD ALLOW RATES TO RISE

YOUNG VOTED TO END FEDERAL SUBSIDIES FOR STUDENT LOANS, TIE RATES TO MARKET TRENDS… 

Young Voted To End Federal Subsidies For Student Loans And Tie Loan Rates To Prevailing Market Trends. In 2013, Todd Young voted for “Passage of the bill that would tie student loan interest rates to the 10-year Treasury note rate. Interest rates on all federal student loans (except Perkins loans) issued on or after July 1, 2013 would be set each year at the 10-year Treasury note plus 2.5 percent. Rates for graduate and parent PLUS loans would be set at the 10-year note plus 4.5 percent. Overall interest rates would be capped at 8.5 percent and 10.5 percent, respectively.” The bill passed by a vote of 221-198. [CQ, 5/23/13, H.R. 1911, Vote 183, 5/23/13]

…WHICH COULD SEE STUDENT LOAN INTEREST RATES RISE IN FUTURE YEARS

House Bill “Links Student Loan Rates To The Ups And Downs Of The Financial Markets,” Rates Would Rise In Coming Years. “House lawmakers on Thursday approved legislation that links student loan rates to the ups and downs of the financial markets in spite of a veto threat from President Obama.  The Republican-backed the bill would allow students to dodge a scheduled rate hike for students with new subsidized Stafford loans next month, but rates could rise in coming years.” [Associated Press, 5/23/13]

House Plan Did Not Allow Students To Lock In Their Interest Rates Until Graduation And Rates Would Fluctuate With Market. “The House plan sets interest rates for all students at around 5%. That’s a hike for undergraduates taking out subsidized loans but a break for undergrads and graduate students who have unsubsidized loans. However, these rates would change once a year. The rates are based on the 10-year Treasury yields, now hovering around 2.1% but expected to rise in coming years. The House would add a 2.5% mark-up to cover the cost of running the plan. The big change from current policy is that students can’t lock in their interest rates until they graduate, but there is a cap that prevents rates from rising above 8.5%.” [CNN Money, 5/31/13]

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