WASHINGTON — Rep. John Kline said on Fox News Monday morning that President Barack Obama’s new student loan program is going to “leave the taxpayers holding the bag.”
Obama last week announced changes to the federal student loan program that allow borrowers to limit their monthly student loan payment to 10 percent of their discretionary income in 2014, down from the current 15 percent. Outstanding debt would be forgiven after 20 years, down from the current 25.
The White House estimates 38,000 Minnesota students would be able to take advantage of the new program and more than 149,000 would be able to consolidate their loans and reduce their interest rates. Obama announced he would institute the plan through an executive order.
Kline, the chairman of the House Education and the Workforce Committee, detailed two main objections to the plan, among them the increased federal borrowing associated with the loan program.
“I just think this is a mistake,” he said. “Some of the changes are going to affect a small group of students; some of them are going to affect a larger group of students. All of it, in fact, is going to encourage more borrowing and, I’m afraid, it’s going to leave the taxpayers holding the bag.”
Kline said increased government spending on higher education is not a tenable policy and schools will eventually need to be proactive in reducing the cost of education.
“They’re going to have to look at their own operating costs and start to curtail the costs of going to college,” he said. “We simply can’t keep providing money from the federal government in the form of subsidized or actual loans and Pell Grants when we don’t have the money.”
Beyond that, Kline said he was concerned about Obama’s use of the executive order. The president has begun issuing a series of executive orders to accomplish parts of his jobs proposal, justifying their use by saying America “can’t wait” for the divided Congress to take action on them.
Kline wrote Education Secretary Arne Duncan on Thursday asking for more information on the program’s new rules.
“[Obama]’s been doing that on issue after issue,” Kline said. “What he’s doing on student loans, in our analysis, is technically legal, but it is a stretch for him to do this and it was not the intent of Congress to do this at this time.”