Sen. Joe Manchin: Bipartisan deal helps offer stability to college students
With a rare and resounding bipartisan vote last week, the U.S. Senate approved a plan my colleagues and I spearheaded that will save students thousands of dollars on their college loans.
The plan means significant savings for undergraduates everywhere in the country, including the 60 percent of Thundering Herd undergraduates at Marshall University who use student loans to help finance their education.
Our bipartisan compromise, which passed the Senate on an 81-18 vote, cuts the current interest rate on government subsidized undergraduate loans from 6.8 percent to 3.8 percent for the coming school year.
This means the average undergraduate who starts college this fall will save more than $2,000 over the life of the loan. Nationally, millions of students and families will save $8 billion in 2013 and more than $31 billion over the next four years.
The proposal, which I hammered together with Republicans, Democrats and Independents, helps 100 percent of students who depend on student loans to help finance school.
No one is left out.
The proposal approved by the Senate also includes significant safeguards for student and parent borrowers
It keeps in place the Income-Based Repayment program, which allows students to pay just 10 percent of their adjusted income based on their family size and, at the end of 20 years, any remaining debt is forgiven.
For example, if you graduate from college, get married, have two children and are making $40,000, your monthly student loan payment can be reduced to $142 per month. That is a manageable amount that won't cripple you as you try to raise a family in your home.
In the years ahead, the interest rates on newly issued federal student loans will be tied to the U.S. Treasury 10-year borrowing rates.
Having a fixed interest rate federal student loan program, which is the way it used to be, is a recipe for political posturing and simply not sustainable over the long term.
Having a market-based rate makes borrowing costs fair, equitable and sustainable, as long as we have strong borrower protections and continue to work to keep our fiscal house in order.
This way, we can ensure that Washington does not wind up either profiting from student loans or losing money on them.
It's simply not fair for the government to profit from students, and that's why, no matter what happens in the market in the long term, the Senate bill includes an interest rate cap of 8.25 percent for college students.
This is important because it provides students and families with some certainty that their interest rates can never rise above 8.25 percent. That gives families the ability to plan long-term and know they won't be crippled with debt.
Student loan rates are only one piece to the issue of making college more accessible and more affordable for all Americans who want to further their education. Congress will get to all the other pieces in the weeks and months ahead.
But last week, the Senate took a vote that will have an immediate -- and positive -- impact on the pocketbook of every student borrower and their families.
There is no better investment we can make than in the education of our children and grandchildren. Today's students will be the driving force of American creativity and innovation for decades to come.
Some bedrock values define America. One of them is pretty fundamental -- we believe in opportunity. We believe that everyone who works hard and plays by the rules should have a shot at success.
In just a few short weeks, students will be returning to the Marshall campus, and they will have plenty to worry about -- what books to buy, where their classes are and, for some, how to haul all their stuff to the top of the Towers East and West.
But after an overwhelming bipartisan vote by the Senate last week, there is one less thing students and their families will have to worry about -- the interest rate on their loans for the coming school year.
Joe Manchin, a Democrat, represents West Virginia in the U.S. Senate.
The Herald-Dispatch welcomes your comments on this article, but please be civil. Avoid profanity, obscenity, personal attacks, accusations of criminal activity, name-calling or insults to the other posters. Herald-dispatch.com does not control or monitor comments as they are posted, but if you find a comment offensive or uncivil, hover your mouse over the comment and click the X that appears in the upper right of the comment. If you do not want your comment to post to your personal Facebook page, uncheck the box below the comment.