WASHINGTON, DC – Major student lending companies came to Capitol Hill today to advance a plan with likely Republican backing to push higher loan costs onto student borrowers, thereby making college more expensive. The lenders are lobbying to raise the interest rates on student consolidation loans by eliminating the ability of borrowers to lock in low fixed rates over the life of their loans.

If successful, the proposal would force the typical student borrower, with $17,000 in debt, to pay more than $6,600 in additional interest over the life of the loan.

“It is shocking that Republicans on this committee and some lenders, including Sallie Mae and the Consumer Bankers Association, would try to make college more expensive for students,” said Representative George Miller (D-CA), senior Democrat on the House education committee. “Students and families today are struggling to cover rising tuition and high loan debt while working long hours and trying to achieve academic success. Now, on top of all that, to tell graduates entering a weak job market that they have to pay significantly more for college is just plain wrong.”

Lenders are lobbying to push higher costs onto students and their families because they do not like three features of consolidation loans: first, that students in some cases may choose to consolidate their loans with other lenders, thus increasing competition in the industry; second, that students may lock in low interest rates for the life of the loans; and third, that lenders must pay fees to the federal treasury to participate in the loan consolidation program. When students lock in low interest rates, lenders stand to earn less profit if interest rates rise. Lenders reap large profits when students pay higher interest rates and stretch out their repayment term without consolidating.

“I am deeply troubled that Republicans would entertain the lenders’ proposal to hike college costs by thousands of dollars for students and their families,” said Miller. “You can dress this Republican proposal up any way you want, but the fact remains that it places heavy burdens onto students. Costs already put college out of reach for too many students who have earned the right and the chance to pursue a degree. We need to work to make college more affordable, not put it even further out of reach.”

In 2002, the Bush Administration proposed eliminating the fixed rate benefit for borrowers that consolidate their loans. This elimination would have cost the average student and parent borrower thousands of dollars. Democrats opposed the elimination of consolidation benefits and worked with student advocates to successfully defeat the Bush proposal.