Federal pricing model would help students better plan college payments

There is $1 trillion in outstanding student loan debt in America.

The number of overdue loans is at an all-time high, with over 5 million student loan borrowers having at least one loan past due. Too many students take years longer to pay off their debt and it postpones their ability to buy homes and cars, start businesses and families and save for retirement.

This can’t be the new normal.

To make it even more difficult to pay back loans, every year, the interest rate on most undergraduate loans is set to double, from 3.4 percent to 6.8 percent. Congress repeatedly passes short-term fixes in a race-against-the-clock mentality to stop this from happening.

This year’s deadline is July 1.

In May, the House of Representatives acted to permanently alleviate this by tying rates back to the free market. It finally takes Congress out of the business of setting student loan interest rates, where they had no business being in the first place.

It allows students to take advantage of low interest rates when available, while imposing a cap to protect student from high interest rates.

Making student loan rates market-based is an idea articulated in President Obama’s own budget. Even though this legislation is hailed as “a rare win” for the president by the Associated Press, he still hasn’t urged members of his party in the Senate to support this long-term solution.

With less than a week until the deadline hits, political gamesmanship shouldn’t prevent progress on the kind of lasting solution families deserve. Students and their parents also battle to absorb unpredictable, ever-increasing college costs.

To bring them more transparency and certainty, last month, I introduced a bill to take the guesswork out of paying for college and give stability and access to people who want to pursue a college degree. Colleges and universities that rely on federal money would be required to fully disclose the cost of pursuing a degree at their institution by providing a four-year pricing model.

These institutions already have standing contracts with food service providers, professors and faculty workers — this bill would require them to create a type of long-term plan with students as well.

Allowing for more predictability will help families plan, budget and save for college. There are several successful examples of this bill going into effect in states across the country. Illinois is one of them. In fact, as a state senator, I supported legislation in 2003 that required public universities and colleges to supply a financial road map so Illinois families know what a college degree will cost in one of our state’s 36 public institutions.

With the cost of a college degree steadily climbing, families scrimp and save to pay for rising tuition costs, room and board and each semester’s course materials, making for a heavier lift every year and increasing dependency on student loans. The House’s long-term approach will encourage more Americans to accomplish their education goals and maintain that America’s workforce is the most competitive in the world.