[Congressional Record Volume 141, Number 142 (Wednesday, September 13, 1995)]
[House]
[Page H8892]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


                         FACTS ON STUDENT LOANS

  The SPEAKER pro tempore. Under a previous order of the House, the 
gentleman from West Virginia [Mr. Wise] is recognized for 5 minutes.
  Mr. WISE. Mr. Speaker, I appreciate the opportunity to address the 
House. I was listening to the distinguished chairman, and I just have 
to present the counterpoint to that, because I think this is going to 
be one of the most important issues that this Congress joins on the 
issue of student loans. I know that I participated in a rally this week 
at West Virginia University, and I am afraid that people are not quite 
as sanguine there about what the implications are. I am glad to hear 
some of the statements that were made, but, at the same time, I think 
we also ought to talk about what the implications are of this decision.
  I know when I first raised these concerns just a few months ago, I 
was dismissed by those on the other side as well. There are no cuts 
intended. We know now, of course, that is not the case.
  Let us talk about, for instance, what the elimination of deferral of 
interest even for graduate students can mean. It is estimated it can 
cost starting $6,000 adding to the lifetime cost of a loan and go up 
past that. Certainly someone trying to go to medical school or some of 
the other graduate level professions can incur large costs.
  But let me say this: I heard a lot about balancing the budget. We are 
talking about $10 billion. I have had it up to here with everybody who 
wants to balance the Federal budget and then points to the family 
budget, and meanwhile they are unbalancing that. In West Virginia the 
tax cut proposed yields that much. You cannot see it, because it is 2 
dimes; 20 cents a day is what the average cut will yield to two-thirds 
of the taxpayers in West Virginia. To those making over $100,000 a 
year, it will bring $7 a day. I do not have enough dollar bills to put 
in this hand to make the $7 a day.
  What will be lost for a middle-income person, the student loan, for 
instance, it will be their ability to defer that interest that will be 
lost. What do we lose as a Federal Government? What do we lose as a 
Treasury? What do we lose as a society? What do we lose as an economy, 
besides the fact we may lose that student who might have found the cure 
for AIDS, or opened up the primary care clinic in rural West Virginia.
  What we will lose as well is we will lose the ability of many people 
who are in college, if they are college graduates, to earn on the 
average 60 percent more than the non-4-year graduate. We will lose 
their ability. Yes, I understand we have been assured this will not 
affect the undergraduate student.
  Where do the rest of the cuts come from? It is $10 billion, of which 
I understand $3 billion comes from the graduate student provision. 
Where does the rest come from, if it is so halcyon?
  Mr. McKEON. Mr. Speaker will the gentleman yield?
  Mr. WISE. I yield to the gentleman from California.
  Mr. McKEON. Mr. Speaker, I really appreciate the opportunity to 
engage in this dialog, because what the gentleman is saying just is not 
true. I think it is probably just because the gentleman has not had a 
chance to see our proposal. But there is no elimination of the in-
school interest subsidy for graduate students or undergraduate 
students.
  Mr. WISE. The gentleman is now saying you are not going to affect the 
interest deferral on either graduate or undergraduate?
  Mr. McKEON. Correct.
  Mr. WISE. Where do you make up your $10 billion?
  Mr. McKEON. OK. $1.2 billion comes from the termination of the direct 
loan program. $4.9 billion, and this is what is really interesting, 
because the other night the President in his speech said that we were 
cutting to help the bankers. In reality, we are going after the bankers 
and the lenders for half of this. $4.9 billion, we are decreasing their 
profit to make up half of the $10 billion. $3.5 billion comes from the 
subsidy for the interest from the time that they graduate until they 
have to begin paying the loan.
  Mr. WISE. The 6-month period.
  Mr. McKEON. Right now, any student that wants, and this is really 
important, because I think some of this rhetoric is scaring parents and 
students needlessly, because as the President commented the other day, 
he said this should be a nonpartisan issue. It really should be. We 
should be working together on this.
  We were talking about eliminating those subsidies. We found other 
ways to do it. The President was talking about eliminating those 
subsidies. This probably was first suggested in the memo from Ms. 
Rivlin. But we found ways to do it without eliminating those subsidies.
  Mr. WISE. But then there is still a balance that has to be reached. 
There is not only $10 billion, as I understand it, that was originally 
considered out of higher education, then the Head Start, Title I and 
all of that, which is part of an overall pot. I am here keep it to 
higher education at this point. If the gentleman will continue on with 
where the balance of the cuts come from?
  Mr. McKEON. $3.5 billion from eliminating the interest subsidy for 
the 6-month period. In other words, right now a student, any student, 
can get a loan to go to school. Any student. If they meet the 
requirements, if their income is low enough and they meet the 
requirement, the Government will subsidize the interest while they are 
in school. That is the current law.
  Mr. WISE. If the gentleman would let me recapture my time, let me 
just close by saying I will examine this. I do feel that these changes, 
assuming they are coming about in this way, show the power of 
grassroots pressure. I think it has been the reaction. I think we are 
going to need to talk about this some more, because we can agree on 
this: There are a lot of parents concerned, and justifiably so, about 
what the impact of these cuts will be.


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