[Congressional Record Volume 148, Number 58 (Thursday, May 9, 2002)]
[Senate]
[Pages S4104-S4106]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                             STUDENT LOANS

  Mr. DASCHLE. Mr. President, I want to talk briefly this afternoon in 
morning business about a matter that I know is of great importance to a 
number of people across the country, an issue that was the subject of 
some discussion in the health committee just this morning.
  Students are borrowing too much, and students are working too much in 
order to finance rising college costs.
  Sixty-four percent of all students borrow Federal student loans to 
finance a college education today. The typical undergraduate student 
graduates with about $17,000 in Federal loan debt.
  Student debt is skyrocketing. As a result, many students find 
themselves saddled with unimaginable levels of student loan debt and 
experience difficulty in repaying their loans. An estimated 39 percent 
of all student borrowers today graduate with unimaginable student loan 
debt.
  The administration, in late April, proposed to exacerbate the current 
circumstances in ways that were inexplicable to many of us. They 
proposed to raise student loan interest rates for consolidated loans by 
changing the consolidation loan interest rate from a fixed to variable 
rates. This proposal has come along, as I noted, when millions of 
students are struggling to pay for college.
  According to the Department of Education, the typical borrower now 
graduates with almost $17,000 in Federal student loan debt, as I noted 
a moment ago. And more than half of all Pell grant recipients graduate 
with student loan debt as well. The typical Pell grant recipient who 
borrows graduates with almost $19,000 in loan debt.
  The Office of Management and Budget, on April 25, released a third 
``Offset Options for the Supplemental'' appropriations bill that is 
currently pending in the House. Many of us were intrigued with the 
offset option that they chose to use involving student loan 
consolidation. I will quote from the document. It is under the category 
``For $1.3 billion for the Pell Grant shortfall, Student loan 
consolidation proposal.'' And they stipulate that would raise $1.3 
billion. Now I am quoting from the OMB document:

       Changing the interest rate formula from fixed to variable 
     is a good thing as fixed rate consolidation loans: can result 
     in significant Federal costs; have higher average costs to 
     borrowers; needlessly penalize borrows who consolidate their 
     loans when variable interest rates are high; and, can have a 
     destabilizing effect in the guaranteed loan program.

  The proposal that the administration made through the OMB would cost 
the typical student borrower $2,800, and the typical Pell grant 
recipient, who borrows, $3,100 over the life of their loans.
  So in order to raise that $1.3 billion for which they are proposing 
to offset, in part, the costs of the supplemental, what they want to do 
is charge the typical borrower an additional $2,800 and the typical 
Pell grant recipient $3,100 over the life of the loan.
  Senator Kennedy has held a hearing this morning. We were very pleased 
that the administration appears now to have had a change of heart, for 
they have announced they are reversing their position. They now 
recognize that this was a major error and that they will now no longer 
adhere to that offset as they look to ways in which to find the money 
to pay for the supplemental.
  We are very pleased with the administration's announcement that they 
will not advocate this additional burden on students, both for student 
loans as well as Pell grants.
  But I must say, I thank the distinguished chair of the HELP Committee 
for calling this to the attention of our colleagues, for calling it to 
the attention, really, of the educational community. Because of his 
stalwart advocacy, and the extraordinary attention that this issue has 
generated over the last couple of weeks, I am not surprised that 
the administration has now had a change of heart.

  This was not a good idea. And, obviously, they have now come to that 
conclusion as well.
  So it is good news for students. It is good news for education. And 
it is especially good news for those advocates, as Senator Kennedy has 
personified, who have called for this change of heart from the day it 
was announced.
  Mr. KENNEDY. Will the Senator yield?
  Mr. DASCHLE. I am happy to yield to the Senator from Massachusetts.
  Mr. KENNEDY. Mr. President, I would like to preface my question with 
this observation: Under the leadership of Senator Daschle, there were 
46 Members of the Senate--under his leadership and Senator Reid's, and 
others--who wrote a letter to the President some 10 days ago, 
recognizing that if this policy of the administration went ahead, it 
would be like increasing taxes for the average working family by 
$3,700. That would be the average increase if they did not consolidate. 
It could go as high as $10,000.
  I am wondering, I did not hear that we ever received a response to 
that letter requesting the deferral of that action.
  As Senator pointed out, I think all of us in this body want to, 
first, give the assurances to young people in college that we are going 
to do everything we possibly can to make college affordable.
  And this is my question to the leader: Doesn't the leader believe 
that we have a real responsibility to do everything we possibly can to 
make sure college is going to be more affordable for working families 
and for the middle income, and that we are also going to stand to make 
sure we meet our commitment we made to the American people and to the 
schoolchildren with regard to the early education bill, that we are 
going to try to meet our commitment to those students, to the families, 
to the parents, and to the local communities as well?
  I am interested in hearing, as the majority leader of the Senate, how 
important you think it is that we continue the effort to ensure we are 
going to make the dreams of our young people attainable--through 
quality education in K-12, and through higher education--and how 
strongly the leader is committed to doing that, after thanking the 
administration for changing their position.
  Mr. DASCHLE. Mr. President, no one knows more about the commitment we 
have made to the students who want to be involved in higher education 
than the distinguished Senator from Massachusetts. He can probably tell 
us the very day it was done. But in recent times, we have increased the 
cap, the availability of resources through both loans as well as the 
Pell grants to students in order to accommodate their additional costs.
  We have recognized that their costs continue to go up. We have 
recognized how serious the financial problems are that many of these 
students have experienced. As a result, we have increased the caps. 
That is why the original OMB decision is so mystifying. Because as we 
raise the caps, if we raise the cost, then we have not done anything to 
help the students, so we have made this raise in eligibility for 
additional assistance virtually meaningless.
  I might say, there is a trend here because that is basically what we 
did with the No Child Left Behind Act as well. We provided more 
opportunities for students in many respects, but then we underfund by 
more than $1 billion the resources we should be providing to ensure 
that act is fully funded.

  So there appears to be rhetoric, and then there is the reality. There 
is the rhetoric, and then there is the resources. The rhetoric is: We 
want to help all these students. The rhetoric is: We don't want to 
leave any child behind. The reality is, we do not provide the resources 
to see that it happens--whether it is an OMB decision on student loans 
or the decision that the budget implies on the part of the 
administration to fund the No Child Left Behind Act.
  Ms. STABENOW. Will the Senator yield?
  Mr. DASCHLE. I am happy to yield to the Senator from Michigan.
  Ms. STABENOW. I would like to thank the leader personally on behalf 
of hundreds of thousands of students

[[Page S4105]]

and their families in Michigan for his leadership on this issue. And I 
also thank the Senator from Massachusetts for his leadership.
  When I first heard about what the administration was proposing, I was 
astounded. I received calls from so many students and families in 
Michigan.
  We all know, as you indicated, that Pell grants are important, 
particularly to lower income students. But so many middle-income 
families rely on the loan program, and rely on the ability to receive 
the lowest possible interest rate in order to be able to send their 
children to college.
  I have to say, on a personal note, having had a son go through 
college and a daughter who is now in college, for myself with loans, I 
certainly appreciate what families feel.
  When we saw the proposal to increase, essentially, the interest 
rates, it was nothing more than a tax on the ability of young people to 
be able to go to college and pursue the American dream. And we all 
certainly have a stake in making sure we do that.
  So I thank the majority leader for his leadership. I know that the 
Senator from Massachusetts, as well, has been vigilant.
  It is good news that they have appeared to change their minds, but we 
certainly know that minds can be changed again. As we go through this 
process, I know we will all stand together to make sure that this is an 
area we do not touch. I cannot imagine something more important than 
making sure the young people, the adults, and families of this country 
have the opportunity to get the skills they need to be successful in 
our economy. I am proud to stand with the majority leader in support of 
this goal.
  Mr. DASCHLE. I thank the Senator from Michigan. She has been a 
tremendous advocate for education ever since the day she was sworn. I 
am grateful to her for her engagement and her willingness to continue 
to work with us. She was one of the signatories on the letter the 
Senator from Massachusetts has referenced. I thank her very much.
  She made an interesting point. She said, what the administration has 
decided could be decided in another direction at some later date, and 
we might find ourselves in yet another set of circumstances involving 
the very same problem; that is, the rhetoric versus the reality, the 
rhetoric versus the resources. We will be going into appropriations. I 
worry about the rhetoric versus the resources once again. Are we going 
to be able to ensure that we can provide the commitment to students at 
all levels, that the resources will be there to match the rhetoric that 
we hear coming from the administration with regard to their commitment 
on education? I have my doubts.
  We have at least two instances now so far--the student loan issue as 
well as the no child left behind question--where the rhetoric has far 
exceeded the results and the reality and the resources. I appreciate 
her comment in that regard.
  Mr. DAYTON. Will the majority leader yield for a question?
  Mr. DASCHLE. I am happy to yield to the Senator from Minnesota.
  Mr. DAYTON. I had been traveling around Minnesota a couple years ago 
while seeking this office, and I was stunned by the increasing number 
of students who were relying on loans and by the increased amount of 
money that undergraduates and graduates were building up in debt before 
they even got their first job in the workplace. It is $25,000 for 
somebody attending a 4-year public institution in Minnesota; $50,000, 
even in a couple cases over $100,000, for people who have come out of 
graduate programs. Have you had that same experience in South Dakota in 
the last few years?
  Mr. DASCHLE. The Senator from Minnesota is exactly right. I don't 
know what the amount is in South Dakota for the typical student, but 
the typical student nationally now graduates with about $17,000 in 
Federal loan debt. My guess is, it is somewhat lower in South Dakota. I 
have talked to a lot of students who are very concerned about paying 
off that debt, very concerned about the debt service they have to pay 
on a regular basis when they graduate. This is something about which 
they are very concerned. Thirty-nine percent of all student borrowers 
graduate today with what is termed an unmanageable student loan debt.
  There is no question, this is a matter that is of increased concern 
to students all over the country, especially those in the Upper Midwest 
such as Minnesota and South Dakota. This is why we were so mystified 
when they said, we are going to ask students, on top of all the debt 
they currently have, to pay an additional $2,800 for a typical loan or 
$3,100 for a Pell grant recipient. I can't imagine how we would want to 
exacerbate their problems by adding even further cost on to the 
overwhelming loan debt that many of them already have.

  Mr. REID. Will the Senator yield for a question?
  Mr. DASCHLE. I am happy to yield to the Senator from Nevada.
  Mr. REID. I wanted the leader to be here because he mentioned it 
briefly. I wanted to pick up on the fact that we have all joined in the 
letter sent to the President. I say ``joined'' because we depend on the 
Senator from Massachusetts for so many things. I want to see if the 
leader will agree--and I know he does--the Senator, as we know, has a 
great pedigree, but there is no one who serves in the Senate--I am not 
too sure has ever served in the United States--who has been more 
interested and more concerned about the people who have no one here to 
represent them.
  I made a couple of notes. On seniors, we have had no leader in the 
Senate such as the senior Senator from Massachusetts, whether it is 
Medicare, whether it is prescription drugs--you list the issues seniors 
are interested in, including Social Security--he is always leading the 
charge in that regard.
  If you talk about the poor, bankruptcy, food stamps, he is always out 
in front, as well as on the minimum wage, Medicaid. And then when you 
talk about education, of course, his committee has written legislation, 
not the least of which is the work that was done in leaving no child 
behind, which is a great piece of legislation. We need to make sure 
there is money there. The environment, hate crimes, nuclear victims, I 
am so impressed with the work the Senator from Massachusetts does.
  And while people come to us all the time--you certainly more than I, 
deservedly--about the things we have done, we usually, on many of the 
issues I have mentioned, take the lead from the Senator from 
Massachusetts.
  Would the Senator agree with me that, in the history of the Senate, 
there have been very few Ted Kennedys who have been able to do things 
such as this, and every college student and parent who is paying off a 
loan I am sure can understand what I am saying. Would the Senator 
agree?
  Mr. DASCHLE. In the history of the Senate, I would say there has only 
been one Ted Kennedy. But the point is so well taken. For 35 years, 
this giant of the Senate has done remarkable things, probably has more 
legislation attributable to his contribution in this body than anybody 
in recent times. We certainly recognize his many accomplishments. It is 
not only the level of accomplishment and achievement but the manner in 
which he accomplishes them that is noteworthy. I appreciate very much 
his calling attention to this issue as well.
  This is another example. This became an issue when the country, 
through his committee and his leadership, was put on notice about the 
implications of this $1.3 billion offset. We are very grateful to him 
for his work in this regard.
  Mr. KENNEDY. If the Senator will yield, I am grateful to both of my 
colleagues for their kind and overly generous remarks. I plan to be 
here for a while longer.
  Let me just carry on and ask the majority leader, the President, with 
whom we worked on education, was in southern Wisconsin earlier this 
week talking about the Federal Government having a responsibility. He 
said: Generally that responsibility is to write a healthy check. We did 
so in 2002; $22 billion for secondary, elementary education, a 25-
percent increase. We have increased money 35 percent for teacher 
recruitment, teacher retention, and teacher pay.
  Does the Senator not find it somewhat perplexing that we see in this 
chart the Bush proposed increase for 2002 is 3.5 percent? It increased 
in 2002 as a result of the leadership of the Senators from South Dakota 
and Nevada and the Democrats. We got it up to 20 percent. The President 
is taking credit

[[Page S4106]]

for it out here in the Midwest. And now we have this year 12.8 percent. 
Do we find that somewhat perplexing when we have the President saying 
we have our responsibilities to write a healthy check? Well, the check 
was written and we increased it, but the Bush proposal is at 2.8 
percent.
  I wanted to mention, in the area which is of such central importance 
to educational reform, that is, having a quality teacher in every 
classroom, of all the educational issues, and there are many--
afterschool programs, the construction issues, smaller class sizes--
having a well-trained teacher in every classroom was key.
  The President was out in the Midwest another day talking about all 
the work they have done, increasing teacher recruitment, retention, and 
pay, 35 percent. That is represented in this $742 million. We supported 
every penny of it.
  Well, now, look at this fiscal year's proposed budget for the very 
same function. Zero. Not even the cost of living. Zero. I am just 
wondering; when the Senator talks about the difference between rhetoric 
and reality, there must be people in the Senator's own State who have 
to wonder about that as well. I am just, again, wondering whether it 
isn't important for us, as we are coming into the debate and national 
elections in 2002--money doesn't solve everything, but money is a 
pretty clear indication of a nation's priorities. I know the leader 
reached his hand out to the Republican leader and we passed a strong 
bipartisan bill that had reform. I think most of us thought we needed 
reform and resources.
  This is enormously troublesome to me in terms of the K through 12, as 
the efforts by the administration are to prohibit consolidation. I 
wonder whether the leader agrees with me that education is a key 
priority and that we are going to have to watch every aspect of it as 
we continue through this legislative session so that we are going to 
meet our responsibilities to families across the country and sharing 
quality education, K through 12, and even earlier education and college 
education.
  Mr. DASCHLE. Mr. President, I heard someone say the other day: You 
can't fool all the people all the time, but why not give it a try.
  I think that is, in essence, what we find the administration 
attempting to do when it comes to education--simply assert that they 
are for it and try to fool all the people all the time. But the Senator 
from Massachusetts points out the problems with that strategy. You 
can't fool all the people all the time, when the resources simply don't 
speak to the reality.
  That is exactly the problem the administration continues to face. The 
resources don't speak to the reality. The resources fall far short of 
the reality. We can all assert we are for education and that we are not 
going to leave any child behind. But I can tell you, there are South 
Dakota children left behind, there are Massachusetts children left 
behind, and Nevada and Minnesota children are left behind. I think that 
is the question we are going to continue to face throughout the 
remainder of the year: Will we leave these children behind because this 
administration refuses to provide the resources? I hope not.
  Today, we got a good indication that, at least in one instance, they 
have changed their minds. When it comes to students, they will provide 
the resources that match the initial reality. We have a lot more of 
these instances in store, but I think we have made the first 
downpayment in the effort. I thank and applaud the Senator from 
Massachusetts for doing so.
  I yield the floor.
  The PRESIDING OFFICER (Mr. Edwards). The Senator from Colorado is 
recognized.
  Mr. ALLARD. Mr. President, I understand we are in morning business.
  The PRESIDING OFFICER. The Senator is correct.

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