[Congressional Record Volume 141, Number 173 (Friday, November 3, 1995)]
[Senate]
[Pages S16656-S16657]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                                  NOTE

  In the Record of October 26, beginning on page S15773, the statement 
of Mr. Jeffords was improperly printed. The permanent Record will be 
corrected to reflect the following version.
  Mr. JEFFORDS. Mr. President, let me briefly remind everybody that a 
while back, when we were dealing with the budget resolution, 67 of us 
voted not to cut more than $4 billion out of higher education. This 
amendment would bring this level closer to where we in the Senate voted 
earlier this year to be--a $5 billion cut from the $10.8 billion. I 
remind my colleagues of that. I hate to see anybody be inconsistent 
with their voting, and since 67 voted for something a little more 
draconian than this, I hope Senators will stay with us on this 
amendment.
  Our amendment restores the 6-month grace period, eliminates the .85 
percent institution fee, and lowers the interest rate on PLUS loans, 
reducing the Labor Committee's instruction from $10.85 billion over 7 
years to $5 billion.
  Let me lay aside the issue of reducing education cuts for one quick 
moment and explain why this amendment is so important. As I mentioned 
just a few moments ago, the amendment offered by my Democratic 
colleagues restores direct lending to current law--or a transition to 
100 percent. I simply cannot support such a provision. I have always 
been a supporter of testing the direct lending program and am on record 
as opposing the Labor Committee's bill to limit it to 20 percent. 
Twenty percent in my view is too small, it cuts out schools that 
currently participate in the program, and that to me is wrong.
  However, as I stated during debate of the 1993 reconciliation, I 
believe in a slow, implementation of direct lending. It should be 
undertaken thoughtfully and carefully. The amendment offered by my 
Democratic colleagues is tantamount to a phase-in of direct lending. A 
phase-in suggests something very different than a thoughtful analysis 
of the two programs. My fear is that we have already made the decision 
to go full force without really looking at the advisability of such a 
move. It is like saying ``ready, fire--and then aim''. For this reason 
I support a firm cap on direct lending. That cap, in my mind should be 
set at a point which protects the schools that are current participants 
and allows some room for growth. I suggest that number be set between 
30-40 percent.
  Mr. President, that is not the amendment we are currently 
considering. I offered that suggestion to my colleagues as a bipartisan 
approach. Unfortunately, that amendment coupled with billions of 
dollars in additional student aid, was rejected by the Democrats and 
interestingly also by groups purporting to represent higher education. 
In particular the American Council on Education.
  There is agreement that we must balance the budget and do so in a way 
that protects students, parents, and institutions. That is what this 
amendment does. It strikes the .85 percent institution fee, restores 
the 6-month grace period, and eliminates the increase in the PLUS 
interest rate. Support for this amendment will provide important 
savings to these students, their parents, and institutions of higher 
learning.
  Eliminating the interest subsidy during the 6-month grace period 
could increase the debt of an undergraduate who borrows the maximum 
$23,000 by almost $1,000, resulting in additional payments of nearly 
$1,400 over the life of the loan. For a graduate student who borrows 
the maximum $65,500, the result would be $2,700 in additional debt and 
almost $4,000 in additional payments. Raising the interest rate and the 
interest rate cap on PLUS loans would increase the total payments of 
parents who borrow $20,000 for their children's education by $1,300.
  It simply does not pay to cut education.
  Consider the following: More highly educated workers not only earn 
more, but they work and pay taxes longer than less educated workers. 
According to a recent study, between 1973 and 1993, median family 
income dropped by over 20 percent for families headed by a person with 
a high school diploma or less; but it held steady for those families 
headed by someone with 4 years of college; and increased for families 
head by someone with 5 years of college or more.
  We need to encourage our young people to pursue higher education both 
to keep us competitive and to help balance the budget. Unfortunately, 
the opportunity for individuals to go on to postsecondary education is 
getting slimmer and slimmer. Pell grant awards have not kept pace with 
college costs. Students have had to increase borrowing in order to make 
up the difference. In 1985-86, the actual maximum Pell grant of $2,100 
paid 58 percent of the total annual cost of attendance for a 4-year 
public institution ($3,637). In 1993-94, the maximum Pell grant of 
$2,300 paid only 36 percent of the total cost ($6,454).
  Because Federal grant programs have grown much more slowly than the 
cost 

[[Page S 16657]]
of attending college, loans now (1994-95) account for 56 percent of all 
student aid, up from 49 percent in 1985-96.
  Borrowing has skyrocketed in recent years to such an extent that the 
amount borrowed through the FFEL program from 1990 to 1995 is greater 
than the total amount borrowed from its inception in 1965 through 1989.
  With such statistics it is no wonder that polls show more and more 
students and families deciding that college is simply out of their 
reach. In fact, close to 20 percent of students consider leaving school 
because of debt. Considering the impact on our economy and the future 
earning potential of individuals with a postsecondary degree, this 
statistic is most disheartening.
  So again, I urge my colleagues to support this amendment and tell the 
Nation that the issue of education spending is a bipartisan issue.

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