Market-based solution a win for students, taxpayers

John-Kline-colorby John Kline
Special to Sun Thisweek
Dakota County Tribune

Changing the status quo is never easy. Minnesotans, myself included, were reminded of this truth this summer when they found themselves caught in the crossfire of petty partisanship with very real consequences for student loan borrowers.

As you may recall, in 2007 then-Speaker Nancy Pelosi championed legislation that would temporarily phase down student loan interest rates from 6.8 percent to 3.4 percent. When the legislation expired, rates would jump back up to the higher level.

Rather than work with Republicans on responsible solutions that would help make higher education more affordable in the long run, the Democrat Congress chose to kick the can down the road. As a result, for the last two summers students and families have been stuck in limbo as Washington politicians fought over how to deal with the scheduled rate increase.

Students deserve better. They should never have to watch Congress hold their interest rates hostage, or see them used as bargaining chips each election year. They shouldn’t have had to deal with the uncertainty that comes with waiting for Congress to cobble together a temporary fix.

Rather than leave politicians in charge of setting interest rates, I thought the market should dictate rates much like it does with other loans. Fortunately, I was not alone in this approach. Earlier this year, President Obama offered a student loan interest rate plan that tied the rates to the market. After conversations with Secretary of Education Arne Duncan, I became encouraged that together we could reach an agreement well before the July 1 deadline.

As chairman of the House Education and the Workforce Committee, I championed bipartisan legislation that resembled the president’s plan. I offered a long-term solution that takes politicians out of the process, and instead ties interest rates to the 10-year Treasury note. My solution would put an end to the quick fixes and campaign promises that have failed to strengthen our nation’s student loan system. It would offer predictability, simplicity, and the flexibility to take advantage of low interest rates whenever possible.

The Smarter Solutions for Students Act passed the House with bipartisan support in May. Unfortunately, rather than working with us on behalf of students, congressional Democrats chose to play partisan games, running misleading ad campaigns and using students as props for campus protests. Meanwhile, the July 1 deadline came and went. Nearly a month later, the president called on the Senate to support a market-based plan. The Senate finally approved a plan that “closely resembled” (Star Tribune) and was “very similar” (MSNBC) to my solution that already passed the House. The House quickly approved the bill and the president signed it into law on Aug. 9.

While I am pleased students and families finally will benefit from my market-based solution, I join most constituents and Americans who are once again disappointed in a government that put politics above progress. The end result is a good bipartisan agreement that protects students and families. It also protects hardworking taxpayers by reducing the deficit by $715 million over the next 10 years. I am grateful for the outcome, but it shouldn’t have taken so long to get to this point.

You deserve better from your government.

Our nation’s education system still faces many challenges. Whether trying to fix the fatally flawed No Child Left Behind law, eliminating the one-size-fits-all Adequate Yearly Progress (AYP) metric, or ensuring college is more accessible and affordable for everyone, we must build on common ground to ensure the next generation is equipped to compete in a global economy.

In a few weeks, our nation’s greatest resource – our precious children and young adults – will return to classrooms across America full of endless optimism, untapped energy, and unbridled enthusiasm. As I stand on the front lines of the education challenges facing our nation, I, too, am optimistic that Washington can follow their lead and work together to ensure a better future for everyone.

John Kline is the Chairman of the House Education and the Workforce Committee. He and his wife, Vicky, live in Burnsville. Columns reflect the opinion of the author.