Jim Nussle: “I rise in support of S. 1762, which ensures that continued viability of low-interest loans for college students. When…”

“I rise in support of S. 1762, which ensures that continued viability of low-interest loans for college students. When the Budget Committee drafted the fiscal year 2002 budget resolution last spring, we sought to avert a potential crisis in the Federal Student Loan Program. The train we saw coming down the track was a change in the interest rate structure set to take place in July 2003. That change would repeal the current structure, which supports $38 billion in new, federally subsidized, student loans each year for needy college students. It would replace it with a controversial new formula that education experts warned would be potentially disruptive to the loan program. The scheduled change could jeopardize the availability of funds for student loans because it would tie interest rates to long-term treasuries. The loan program has thrived for years on interest rates that correspond to short-term Treasury rates. The scheduled change was created under the assumption that, by 2003, all student loans would be issued by the Federal Government. But 70 percent of the loans are now issued by private lenders. We have to adjust for that reality. Fixing the interest rate problem will be expensive. It will cost money because the baseline already assumes the scheduled change in interest rates.”