Alexander Amendment Would Stop Gov’t from Overcharging 19 Million Students on Loans to Pay for Health Care

Says More Than 200,000 Tennessee Students on Track to Pay $1,700-1,800 in Excessive Interest on Loans to Fund Washington Takeover of America’s Health Care System

Posted on March 24, 2010

WASHINGTON – U.S. Senator Lamar Alexander (R-Tenn.) today on the Senate floor proposed an amendment that would reduce interest rates on student loans by 1.5 percentage points, saving the average Tennessee student up to $1,800 in interest over ten years.  During debate on the Health Care Reconciliation bill (H.R. 4872) – which would eliminate the current student loan system and replace it with direct lending through the U.S. Department of Education – Alexander offered a motion that would return the reconciliation bill to the Senate Committee on Health, Education, Labor and Pensions (HELP) and require it to lower interest rates for student loans by 1.5 percentage points, from 6.8 percent to 5.3 percent. Alexander made the following remarks on the Senate floor today when he introduced his amendment to the bill:

“Washington will overcharge 19 million students to help pay for the health care bill. According to the most recent Congressional Budget Office estimates, about $8.7 billion of the overcharged money, over the next ten years, is going to go to pay for the health care bill. But Tennessee students aren’t Wall Street financiers. Washington is going to overcharge a single mom going to school in Tennessee who has a job but wants a better job – to pay for health care. She borrows some money to go to a community college, and the federal government overcharges her to pay for some government program. She might not like that. In fact, I think there will be about 19 million student borrowers across the country who will go to school next year and say, ‘Wait a minute here. You mean you're overcharging me on my student loan to pay for this health care bill and to pay for other government programs?’ And the answer will be yes – that's what Congress is doing unless it votes for my amendment.

“Now, the estimate is that their federal takeover of the student loan system will save $61 billion. If that’s correct, let’s give it to the students. It may not seem like a lot of money to congressmen or senators in Washington, but to the single mom borrowing the money, $1,700 or $1,800 is a lot of money.”

Alexander said that more than 200,000 Tennessee students will be overcharged $1,700 to $1,800 over the life of their ten-year student loans to pay for health care and other government programs. At Tennessee institutions of higher education, these students, starting July 1st, will have no choice but to get their student loans directly from the federal government. The following is a list of several Tennessee schools and the average savings the government could return to them on their loans if Congress adopts Alexander’s motion:

University of Tennessee – Knoxville

  • More than 11,000 students would save an average of $1,737 over the life of their 10-year loans.

University of Tennessee - Martin

  • More than 3,600 students would save an average of $2,073 over the life of their 10-year loans.

Maryville College

  • More than 800 students would save an average of $1,179 over the life of their 10-year loans.

Carson-Newman College

  • More than 1,200 students would save an average of $1,679 over the life of their 10-year loans.

East Tennessee State University

  • More than 8,100 students would save an average of $1,506 over the life of their 10-year loans.