Congressman Scott Perry Offers Student Loan Reform Proposal
Washington, July 25, 2019
Washington, D.C. – Congressman Scott Perry offered a new legislative proposal to address the $1 trillion student loan crisis and exploding cost of higher education. H.R. 3786, the Student Loan Reform Act, encourages colleges and universities to co-sign student loans with their student borrowers, which will help drive down the cost of borrowing for students, and encourage universities to keep the cost of higher education in check. The bill encourages the co-signing without providing a taxpayer-paid bailout for student loans.
“My bill gives student borrowers choices and bridges a gap with universities. We’re providing a natural market incentive, rather than a mandate or “forgiveness plan” to get the cost of college lower,” said Congressman Perry. “We don’t want to limit opportunity for those looking to pursue a college degree, but the student loan crisis and default rates are threats to our National security. We need to re-inject some accountability into the system. Our proposal is a good first step to resolving the student loan crisis, and holding the taxpayer harmless in the process.”
Under the Perry proposal, universities choosing to participate in the program can offer lower interest rates to their student borrowers. If a college or university chooses to make the co-sign option available to its students, the student gets a lower interest rate proportionate to the reduced risk. The U.S. Department of Education also would make available a list of institutions of higher learning that participate in this program.
The Student Loan Reform Act provides significant benefits to the borrower by reducing costs over the life of the loan. It also benefits the Taxpayer. Right now, in the event that a student borrower defaults on a loan due to inability to pay, Taxpayers are responsible for the cost of the student loan. Under the Perry proposal, colleges and universities, instead, would be responsible for paying back the loan.
“Institutions of higher learning should stand by the degrees they offer. If the cost of the degree isn’t going to yield the expected salary benefit, and a student in turn can’t cover his/her student loan payments, it’s in the best interest of the school to get the student on track, with better career services and/or a reduction of overall costs for the skills acquired,” Perry continued.
The bill awaits consideration by the House Committee on Education and Labor.