McHenry: This is a Crisis, but it is a Crisis that Government Created
September 10, 2019 –
WASHINGTON – Today, Republican leader of the House Financial Services Committee, Patrick McHenry (NC-10), delivered the following remarks at a full committee hearing on the student loan crisis and the impact of Democrat’s nationalization of the student loan industry:
Watch Ranking Member McHenry’s remarks here or by clicking on the image below.
Ranking Member McHenry’s remarks as delivered:
“Let’s rewind; it’s 2009, it’s 2010, there are super majorities by the Democrats in the US House, the US Senate, and a Democrat in the White House. At that moment, in the midst of the Affordable Care Act, the nationalization of our student lending was added to that bill, as a pay for.
“It is the consequence of Democrat policies that have nationalized the student debt lending in this country. As a consequence of those actions, we have saddled a generation with unaffordable debt and an education that does not outmatch the cost of that education.
“This is a crisis, but it is a crisis that congress created and foisted upon a generation of debt without that generation actually having the decision making, nor the federal government having the underwriting standards to ensure that good decisions were made, and that we were going to give them a loan that they would be able to repay.
“So, if you think about the consequences of the mortgage crisis that led to the financial crisis, part of that was congressional law making, yes; but most of that was in the private sector. This matches that mortgage crisis, but it was federal action, on the whole, that has foisted debt upon a generation. It is unconscionable. It is unconscionable that congress would do that.
“We have to fix the law and ensure that the federal student debt is much more like the private student debt markets.
“So, though we don’t have jurisdiction of the Department of Education where this is primarily done, we know the statistics. Nearly 43 million individuals, one in six Americans, have federal student debt. According to the Institute for College Access and Success, the class of 2018 averages almost $30,000 debt per student. The federal loan portfolio now exceeds $1.4 trillion, and 5.2 million borrowers of the 43 million total federal student loan borrowers, have loans in default.
“A significant portion of that debt is at risk of default as well, and not only is the federal government the lender of these loans, it is now the largest consumer lender in the nation. They are not cheering for what I just said in the hallway.
“But think about that; the largest consumer lender in the nation. We don’t adhere to the same laws that we demand of the private sector in how we foist this debt upon students and young people.
“The federal government is the largest consumer lender and the folks responsible for the stability and security of these loans are in the Department of Education, which does not issue student loans issuing any type of underwriting standards.
“The federal government must become a responsible lender as we demand of the private sector. We have to make sure that the costs match the benefits of education.
“So, we cannot address the student loan crisis in higher education unless we also talk about the cost of higher education. That too is not within our jurisdiction, but it’s important for us to agree that that is something that we should discuss and debate.
“Student loan servicers do not set interest rates or loan terms. Student loan servicers are subject to strict rules and regulations. Mechanisms exist to ensure they are held accountable. That is not the case for the loan originator, the federal government. We have to fix this.
“Again, I look forward to the witnesses, and again highlight the fact that the jurisdiction of student lending is not within this committee’s jurisdiction.
“I yield back.”
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