[Congressional Record Volume 148, Number 50 (Monday, April 29, 2002)]
[Senate]
[Pages S3496-S3498]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
STUDENT LOAN PROGRAM
Mr. KENNEDY. Mr. President, I am sure that when all of our colleagues
travel back to their States and meet with parents and families, they
are being asked about the increased cost of tuition at the universities
and colleges across the country.
I know that is true in my own State of Massachusetts. The average
fees at the University of Massachusetts, one of our fine universities,
are going up in excess of $1,000 for this next year.
Quite frankly, in my part of the country, families are really
concerned about the economic conditions. I know the economic
indicators, the GDP indicators, are showing some improvement. Clearly,
the unemployment figures are not reflecting the real situations of many
Americans in many parts of the Nation. So many Americans are facing
lay-offs and those that are finding new jobs are often taking pay cuts.
As many states cut their higher education budgets, people are wondering
how they are going to afford the increases in tuition.
Many of those attending school and recent graduates were very
perplexed to read the story in the New York Times over the weekend that
says: ``Bush seeking to squeeze school loan program.''
The student loan programs offer low-interest loans to full-time
students. These programs are available to low and middle-income
families. I have an AP story that says:
The White House has suggested $5.2 billion savings from
Federal student loan programs. The White House Budget
Director Mitch Daniels proposed the savings to the House
Speaker Dennis Hastert last week. Among Daniels's proposed
savings is to require college students and graduates who wish
to consolidate their Government-backed education loans to use
variable interest rates, a change from the current program.
I want to share with the Senate what has happened in my own State,
and it is replicated across the country. Just last year, we had some
36,000 families consolidate their loans, taking advantage of the lower
fixed interest rates. It amounts to $1 billion. The average loan in my
State is $29,000. Let me be very clear, Mr. President. If the proposal
that is reported in the New York Times goes into effect, it will mean
$3,000 more for every $10,000 a person owes to the guaranteed loan
program--$3,000; $10,000 over a 30-year period. That is $10,000
additional over a 10-year period if that student owes $30,000.
In my State of Massachusetts, the average consolidated loan is
$29,000. To do what? According to Mr. Daniels, for the next year, it
will mean $1.3 billion in savings to the administration evidently so
they can use it for the tax cut program for wealthy individuals. Talk
about a financial transfer. This administration is going to balance its
books at the expense of students. They are talking about $1.3 billion
from students and middle-income families who will have to pay a
variable rate on consolidated loans, instead of taking advantage of the
lower fixed interest rates at the present time. This is an effort to
effectively fix the system so that students and their families will pay
more so this administration can afford more in tax cuts.
Families pay what they can afford in tuition for their children to go
to school, and depend on the federal loan programs for the remainder of
the tuition. When it comes time to help repay those student loans, they
will have to pay higher interest rates, and they ask why. Hard working
families should get the best deal on interest rate that is available.
The New York Times article goes on:
``The Bush administration is seeking to ease its budget by
squeezing $1.3 billion from the Federal student loan
program,'' administration and congressional officials say
today.
Whether it is the $1.3 billion as in the New York Times or the $5
billion, what they are basically saying is the students and middle-
income families are going to have to pay a good deal more rather than
taking advantage of the lowest interest rates.
That is poor education policy. It is grossly unfair to middle-income
families, and it is clearly not in the national interest. Our national
interest ought to be to encourage the best and the brightest to
complete their education, to be involved in the communities of this
country, and contribute to our Nation's democratic values and its
economic values.
How can the administration make that kind of request to the Congress?
Mr. President, I just want to make it very clear, as far as our
committee goes, I can say without fear of any contradiction, this
suggestion will not pass.
The last time we faced this type of proposal was in 1981 under
President Reagan who suggested an origination fee which was an
additional burden on students and their families who were taking out
student loans. We were unsuccessful in stopping that fee, and I believe
we will succeed in rejecting the elimination of the fixed rate
consolidation loans. But I tell my colleagues, how in the world can you
believe this administration is putting education first when it is
trying to shortchange the students of this country in an unfair and, I
think, unwise way?
Mr. SARBANES. Will the Senator yield for a question?
Mr. KENNEDY. I will be glad to yield.
Mr. SARBANES. I must say, when I saw that article, the first thing I
thought to myself was: They must have figured out some sort of unique
way to achieve some savings in the college loan program which will not
affect the beneficiaries of the program. It never occurred to me until
I read the article, to which the Senator has referred, that they were
intending to take this money right out of the hide of the
beneficiaries.
As I understand it, we have had this program where people can
consolidate their loans and lock them into place with a fixed interest
rate. That has helped, as I understand it, to significantly reduce the
default rate on college loans, if I am not mistaken.
I think 10 years ago we had a default rate at about 22 percent, and
now we have cut that rate to, what, about 5 percent?
Mr. KENNEDY. Five point six percent.
Mr. SARBANES. Five point six percent.
Mr. KENNEDY. Under the Clinton administration.
Mr. SARBANES. That is one of the benefits of providing a rational
framework for students and their families to address these college
loans.
First of all, we have to understand these students are taking on a
tremendous burden as they move through college in order to get a
college education. There are many people who argue we are not doing
enough to help lift that burden. But the notion that we should now add
to it in this significant manner that the head of the OMB is talking
about I find outrageous.
How are these people going to afford this college education?
We have set up a system which seems to be working pretty well. If
anything, we ought to provide more assistance, not less. I certainly
commend the Senator for taking to the floor to underscore this problem.
I gather they want
[[Page S3497]]
to try to do it in the supplemental appropriations bill, with very
little consideration of its impact or an opportunity to affect what is
happening.
Mr. KENNEDY. The State PIRGs have completed an interesting study. It
is an independent evaluation on higher education student loan debt.
Their estimate on the cost to borrowers of switching from a fixed rate
to a variable rate consolidation loan--this is their estimate, not
mine--for an average graduate with $16,000 in college debt would have a
$2,800 increase over the next 10 years and $6,300 if they chose to
spread their payments over 20 years. If one has $16,000 they would pay
an additional $2,800--the average loan is $29,000 in my State. Do you
understand that? Mr. President, $16,000 is just about the national
average loan. This is not my estimate, this is the estimate of the
highly regarded and respected national group the Public Interest
Research Group.
I do not know how many people are consolidating loans in the State of
Maryland and the State of Illinois, but I do not think that higher
rates are what these families deserve. They deserve the best possible
low interest rates. They are uncertain about their economic future.
They are planning their life. They have every right to consolidate at
the lowest interest rates, and now the administration is attempting to
force them to pay the rate at the time that they originate their loans.
Mr. DURBIN. Will the Senator yield?
Mr. KENNEDY. I will be glad to yield.
Mr. DURBIN. I thank the Senator for raising this issue, and I thank
the Senator from Maryland for joining us. Roughly two out of three
college graduates today leave college with a debt. The average debt
across the United States for all college students is $16,000. That is a
pretty substantial sum of money for somebody starting out to get their
first job out of college.
Mr. SARBANES. Age 21, I might add, or 22, and they are already
walking out, after getting their education, with a $16,000 average
debt. A lot of them, as the Senator points out, have more.
Mr. DURBIN. I might say to the Senator from Massachusetts, the
experience in Illinois is the same as in his State. Our average student
loan, as consolidated under this program, is $30,000. What the Senator
from Massachusetts tells us is that President Bush's administration has
suggested adding $10,000 in cost to pay back that student loan.
So one might say to themselves, this must be some national emergency
that would lead us to the point where we would take a young college
graduate and say we are going to eliminate a program and heap on
another $10,000 in debt for them to pay off. The national emergency
appears to be making permanent the President's tax cut program.
We did a little analysis on this program recently, and I think the
Senator from Massachusetts is aware that 65 percent of President Bush's
tax cut goes to people making over $500,000 a year. So think about this
for a second. The new college graduate coming out with a debt, in my
State, of an average $29,000, just got a $10,000 bill to collect money,
to do what? To give to the average person making over $500,000 a year a
$39,000-a-year tax break.
What is wrong with this picture? Why are we not helping the young men
and women who are going to lead this Nation with their education to
take the kind of jobs that they need?
I know the Senators from Maryland and Massachusetts know the
situation where so many young graduates want to go into teaching, for
example, and they look at their student loans and say: This is
impossible. I cannot make enough money as a teacher.
The Bush administration proposal would make their debt larger. For
what? To give a tax break, two-thirds of which goes to people making
over $500,000 a year. This is totally upside down.
The student loan obligations for students across America have doubled
within the last 8 years. They are likely to go up in the future. The
Bush administration proposal, I am afraid, is going to make it even
more difficult for our sons and daughters and grandsons and
granddaughters to pursue a higher education.
Mr. KENNEDY. May I add one point? I would be interested in my
friend's reaction to this. If someone is receiving a Pell grant, the
average family income for a Pell grant student is $17,000. These are
gifted, talented individuals who could qualify for any of our greatest
universities. Their family income is under $17,000, and the Pell grant
is available to them. Reading from the Public Interest Research Group's
analysis, even worse off are the students who depend on the Pell grants
to finance their education. This would cost the typical Pell grant
borrower $3,100, almost a thousand dollars more because since they are
lower income, they have to pay--at the start they are paying higher
rates.
So we are talking about students who are gifted and talented, who
have every kind of asset except a large wallet or pocketbook, who have
a great deal to contribute to our Nation, and whose family income is
less than $17,000, people who are going ahead and working. Sixty-three
percent of the students in this country now who are on scholarship work
25 hours a week or more. That is extraordinary.
We wonder why the students are not talking about books and education;
they are talking about their debts and their obligations. Well, I am
wondering, if my two friends would not agree, when families of limited
income, even though their children have the academic gifts and talents
to go on to education, are going to be forced to say: No, count me out;
I will just go on, wait on tables, I will park cars, because I am not
going to put my family through that kind of indebtedness. That is the
message that will go out with this proposal.
Mr. DURBIN. Asking the Senator to further yield, I will share with
him this statistic: 39 percent of college students now graduate with
debt loads that are termed unmanageable, meaning their monthly payments
are more than 8 percent of their monthly incomes.
With this Bush administration change putting more debt on these
students, it becomes impossible for them to deal with this.
Mr. KENNEDY. But the Republican response to that is these students
are going to become lawyers and doctors so they will be able to afford
it. Would not both my colleagues agree, we have a shortage of 2 million
schoolteachers in this country? What we are talking about is
schoolteachers. We are talking about social workers who we are trying
to help. We are talking about those who would be childcare providers.
We are talking about police officials and nurses. These are the ones
who are entering low wage professions, trying to make it and to be
responsible and pay off their debt. They are the ones who are going to
find education virtually priced out.
Mr. SARBANES. Will the Senator yield?
Mr. KENNEDY. I am glad to yield.
Mr. SARBANES. The fact is that no other advanced country places as
much of the burden of obtaining a college education on the individual
student and the family as we do. We in the Congress have been trying to
ease that burden through a combination of grants and loans, although we
have been shifting from grants to loans increasingly over the years.
Other countries do not do the same thing. Why not? Because they
recognize the society and the nation benefit from developing the
talents and the capacities of their young men and women; that it is not
only the individual who gets the benefit but society gets a benefit
from educating these people.
As my colleague from Illinois pointed out, if they walk out of
college with this huge burden on their back, then obviously they are
motivated to go to lucrative professions in order to pay off the debt.
I have talked to young people who have said: I really would like to
teach but I cannot afford to teach because I have this debt burden that
I have to pay off. Therefore, they are looking to go into some
profession where they can make a lot of money. They are lost to the
teaching profession.
Now that we have a system in place, we knock out one aspect. My
understanding is the consolidation of loans has been in effect since
the Reagan years. I understand it first went into place in 1986, the
consolidation of loans. It makes good sense. We are always telling
people they ought to consolidate their loans and we put it into place.
Now we are taking away from
[[Page S3498]]
people another support to try to help with higher education.
Mr. KENNEDY. The Senator is quite correct. There is a very
interesting statistic for those who enter medical school. 85 percent of
medical students want to become general practitioners. They care about
patients and want to be there on the front line treating the families
of America. However, they end up borrowing so much to pay for their
school costs that they need to enter specialization because of the
salary differences at the very time we need more general practitioners.
I draw the attention of my colleagues to the chart and what has
happened with grants and loans. My colleagues remember the great
debates held on providing greater access to higher education for all
Americans, those national debates go back to 1960. President Kennedy
believed the size of your pocketbook should not determine what
university a student attends, only your qualifications should determine
where you could attend school. Grants, some loans, work-study programs,
summer employment should add up to the cost of your tuition and fees.
All of those match together in an economic package so a student can
successfully go to the school of their choice.
I was in the Education Committee when Secretary Bennett said: Too
bad. Those families can go where the loans will take them. That is our
view of this Republican administration. That is the attitude. We do not
want to limit opportunity. I know where that is in the Record.
We have seen the buying power of grants fail to keep up with the
costs of college. The neediest children are forced to take out loans.
Now we find at a time when these young students and graduates are
trying to take advantage of refinancing their loans, we are hearing the
administration saying: No, we need another $1.3 billion for our tax
program so we are going to force students to wait and see what the
interest rate will be every year instead of locking in at a fixed rate.
That is regrettable.
I draw another chart to the attention of my colleagues. This is a
women's issue. Education is one way that we can help women close the
earnings gap. When you deny women the opportunities to continue
education, you continue a perpetuation of the notable disparity taking
place. Women, like their male counterparts, increase their earnings
when they increase their education.
Once you put the economic binds by effectively denying people the
ability to discharge debt, this will work against women students. We
see it already. We will see it even grow over the period of time.
Mr. DURBIN. Will the Senator yield?
Mr. KENNEDY. I yield.
Mr. DURBIN. The Senator was part of an effort that many joined with
President Bush: Leave no child behind. The idea was to improve the
quality of education across America, to make certain, with
accountability, that schools were graduating students who had the basic
wherewithal to succeed in society.
One of the linchpins was to improve teachers in the classroom.
I would like the Senator from Massachusetts to tell me if I recall
this correctly. Are we moving through President Bush's bill to a point
where more and more teachers have to be certified in that they are
going to teach in schools? In other words, you cannot be the gym
teacher who says, I will teach biology. You have to stand in front of
the classroom with students.
We are passing bills saying, teachers, we want you to stay in school,
get more advanced degrees, and be more valuable in the marketplace but
come back to the classroom. And now the Bush administration, months
later, comes in and increases the cost of education for those who
aspire to be those quality teachers. There is a disconnect.
Mr. KENNEDY. The Senator is absolutely correct. It is a powerful,
powerful argument. We are trying to make sure we are going to have a
well-qualified teacher in every classroom. More and more young people
who are entering teaching are saddled with enormous debt burden. As a
national objective, have a well-qualified teacher in every classroom.
How can these young professionals afford to pay off their loans when we
know that too many teachers are underpaid.
And the Senator quite rightly points out that will require tens of
thousands, hundreds of thousands, of teachers to get certification and
to go back to universities and colleges, community colleges, to get
these certifications.
This kind of activity is going to make it that much more expensive,
that much more of a disincentive to go into teaching. That is
enormously important and significant. I thank my colleague for bringing
this critical fact to the floor.
I see my friend from Rhode Island who has been such a leader in
education, and follows a very proud tradition in his state. We give
fair notice to the administration that we are going to do everything we
possibly can legislatively do to make sure this does not take place. We
want to keep as many low-cost options for borrowers as possible to make
sure that more people are getting college degrees. We will have more to
say about this in the very near future.
I yield the floor and I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The assistant legislative clerk proceeded to call the roll.
Mr. DURBIN. Mr. President, I ask unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER (Mr. Kennedy). Without objection, it is so
ordered.
The Senator from Illinois is recognized.
Mr. DURBIN. I thank the Chair.
(The remarks of Mr. Durbin pertaining to the introduction of S. 2393
are located in today's Record under ``Statements on Introduced Bills
and Joint Resolutions.'')
Mr. DURBIN. I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The assistant legislative clerk proceeded to call the roll.
Mr. REID. Mr. President, I ask unanimous consent the order for the
quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
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