Heidi Alexander: “If I could respond to the Senator who suggested that,--the answer is yes. I think it is fair to say that the…”

“If I could respond to the Senator who suggested that,--the answer is yes. I think it is fair to say that the consolidation option that a student has in case the rates go up, at 8.25 percent can be called a cap. It is not a hard cap, but it is a cap. And the second cap is the income repayment provision of which the Senator speaks. If you are making $40,000 a year, after they apply the formula you probably are not spending more than about 10 percent of your income--it is something called disposable income--to pay for your student loan. Loan repayment then continues for about 20 years. If at the end of 20 years you have not paid your loan off, the loan is forgiven. Any student who has a loan has that opportunity. They can consolidate at 8.25 percent, and income repayment limits the amount they have to pay each year. So they have that. One of the things I noticed about the Manchin-Burr bill that I would like to ask the Senators to talk about is that you have come up with-- what I am beginning to understand, as I study this more and more--a very significant contribution: the idea that all of the undergraduate student loans--which, as I understand it, are about two out of three of the loans--should have the same interest rate. First, it is confusing the way undergraduate loan interest rates are now, but the other reason is that about 80 percent of the people who have subsidized loans, the low-income students, also have unsubsidized loans.…”