[Congressional Record Volume 148, Number 83 (Thursday, June 20, 2002)]
[Senate]
[Pages S5852-S5853]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Ms. LANDRIEU:
  S. 2650. A bill to amend the Higher Education Act of 1965 to provide 
student loan borrowers with a choice of lender for loan consolidation; 
to the Committee on Health, Education, Labor, and Pensions.
  Ms. LANDRIEU. Mr. President, I rise today to introduce to my 
colleagues, the Consolidation Student Loan Flexibility Act of 2002, a 
bill of great importance to the hundreds and thousands of students 
working to make the dream of a college education a reality. According 
to a recent report published by the National Center for Higher 
Education, the cost of attending two- and four-year public and private 
colleges has grown more repidly than inflation, and faster than family 
income. Poor families spent as much as 25 percent of their annual 
income to send their children to a public, four-year colleges in 2000, 
compared with 13 percent in 1980. What's worse, the Federal Pell Grant 
program, designed to help alleviate the financial burden on low income 
families, covered only 57 percent of the cost of tuition at public 
four-year colleges in 1999, compared with 98 percent in 1986.
  The most widespread response to the increasing costs, according to 
the report, involves debt, more students are borrowing more money than 
ever before. Since 1980, Federal financial assistance has been 
transformed from a system characterized mainly by need based grants to 
one dominated by loans. In 2000, loans represented 58 percent of 
Federal student financial aid, and grants represented 41 percent. 
Studies show that a major factor influencing a student's choice of 
college and degree program is the amount of debt connected with the 
type of institution or profession. Make no mistake, these choices not 
only affect the lives of the students themselves but also impact 
society as a whole. Efforts to attract college graduates into needed, 
but not necessarily high paying careers, such as teaching, may be 
undermined by substantial debt burdens.
  School loans are an important and legitimate aspect of attending 
college for many students, but it also raises several policy concerns. 
One area of growing concern surrounds what is called the single lender 
rule. The single lender rule is a provision in the Higher Education Act 
that affects the ability of college graduates to consolidate multiple 
student loans into a single new loan for the purpose of getting a lower 
rate. Specifically, it provides that borrowers having all of their 
loans held by a single lender have to consolidate with that lender, so 
long as it offers consolidation loans. Therefore those borrowers with 
all of their loans in one place can't go to other lenders offering 
better rates or benefits, they have to stay where they are.
  I would like to submit for the Record some numbers which demonstrate 
how damaging the single lender rule is for students. Last year, 143,504 
students were denied the benefits of loan consolidation because of the 
single lender rule. In my home State of Louisiana, 3,329 students were 
prevented from obtaining a lower-rate or more generous benefits because 
of this rule. Many of these students are studying to be doctors, 
nurses, teachers, and lawyers. These are conservative numbers, 
collected from student loan providers, the reality is even more 
staggering.
  This restriction makes no sense and while it may benefit those 
offering student loans, it sure isn't designed to provide students with 
the power that choice and competition can bring. A few months ago we 
acted to pass a package designed to stimulate the economy and secure 
long term economic stability in America. I would be hard pressed to 
think of a better way to ease the burden on our States and to secure a 
brighter future for the U.S. economy than to make a college degree

[[Page S5853]]

an affordable option for all who seek to obtain one.
  The Census Bureau has released new figures on the earnings gap 
between people with a high school education and those with bachelor's 
degrees. It's wide and growing. The bureau said that college graduates 
made an average of $40,500 last year, while the average high school 
graduate earned $22,900. People with bachelor's degrees now earn an 
average of 76 percent more than high school graduates. In 1975, the gap 
was 57 percent. One does not have to have a Ph.D. in math to understand 
the impact that closing this gap would mean for the economy, more 
people with college degrees means higher consumer spending and lower 
unemployment.
  Some of my colleagues may be asking, why now? Why not wait until next 
year when we will be re-addressing the Higher Education Act? Here are 
some of the reasons why I believe this is not a good idea for us to 
wait until next year or the year after. To delay repealing the rule 
until the H.E.A. Reauthorization would unnecessarily victimize hundreds 
of thousands of student loan borrowers, depriving them of the ability 
to manage their debt in an optimal way. Today's graduates are entering 
a workplace where jobs are hard to get and salaries for starting 
positions are lower than they have ever been before. In this 
environment, we need to be building up opportunities for them to reduce 
their debt not increase it.
  This bill is an important first step to making college more 
affordable for all American families. I hope my colleagues will join me 
in making the dream of a college education a reality for all.
                                 ______