[Congressional Record Volume 158, Number 60 (Wednesday, April 25, 2012)]
[Senate]
[Pages S2733-S2734]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. ALEXANDER (for himself, Mr. McConnell, Mr. Enzi, Mr. Kyl, 
        Mr. Cornyn, Mr. Wicker, Mr. Inhofe, Mr. Barrasso, Mrs. 
        Hutchison Mr. Blunt, Mr. Hoeven, Mr. Johanns, Mr. Coats, and 
        Mr. Isakson):
  S. 2366. A bill to extend student loan interest rates for 
undergraduate Federal Direct Stafford Loans; placed on the calendar.
  Mr. ALEXANDER. Mr. President, I would like to talk a little bit more 
specifically this morning about the issue of interest rates on student 
loans. President Obama is busy this week traveling to campuses across 
America to talk about student loans. It is a noble goal to talk about 
making it easier for students to afford college. It is a goal we all 
share.
  But I am afraid the President is not telling the whole story. Because 
if he were to tell the whole story, what he would have to tell the 
students is that the principal reason for the rise in tuition at public 
colleges and universities and community colleges across America and the 
principal reason for the increase in student loans is President Obama 
himself and his own health care policies.
  To be fair, he did not start many of these policies. They have been 
going on for a good while. But he has made them worse over the last 
several years. When the new health care law goes into effect in 2014, 
with its new mandates on States, we will find an exaggeration of what 
has already been happening, which is that Federal health care mandates 
on States are soaking up the money States otherwise would spend on the 
University of Oklahoma, and Tennessee, and the State University of New 
York.
  When States do not support their public colleges and universities, 
which is where approximately three-quarters of our college students 
attend, then their only choice is either to become more efficient, to 
decrease their quality or to raise tuition. Most of them are trying to 
do all three.
  So Federal health care policies are the main reason tuition is up, 
and the reason tuition is up is the main reason debt is up. 
Specifically, what we are talking about, and what the President has 
been talking about, is a 3.4-percent interest rate for some student 
loans.
  Here are some facts about that. The President has proposed that for 1 
year, for new Stafford subsidized loans, rates would remain at 3.4 
percent. Governor Romney agrees with him. I agree with him. So there is 
substantial support from both the President and his probable Republican 
opponent in the Presidential race for this next year. New loans, after 
July 1, which are now at 3.4 percent, would stay at 3.4 percent. The 
benefit to students who get the advantage of that lower rate--most 
other loans are at 6.8 percent by law--is about $7 a month, according 
to the Congressional Research Service.
  All this talk is about offering students the benefit of about $7 a 
month for new loans. It is important to notice that no student who has 
a 3.4-percent loan today will see his or her interest rate go up. I 
will say that again. If you have a loan and you are going to the 
University of North Carolina and are paying 3.4 percent today, your 
rate will not go up on July 1. The law only affects new loans, and it 
doesn't affect 60 percent of loans. For 60 percent of those getting new 
loans after July 1, they will continue to pay the 6.8 percent set by 
Congress a long time ago.
  I am glad the President is bringing this issue up, because the real 
driver of higher tuition and higher interest rates is the President's 
own policies--in two ways: The government and congressional Democrats 
who passed the health care law are actually overcharging students--all 
students--on student loans and using some of the money to pay for the 
health care law. These aren't just my figures. The CBO said when the 
new health care law passed, Congress took $61 billion of so-called 
savings--I call them profits on student loans--and it spent $10 billion 
to reduce the debt, $8.7 billion on the health care law, and the rest 
on Pell grants.
  How does that work? How could Congress be overcharging students? 
Well, under the health care law, the government borrows money at 2.8 
percent. The government then loans to students at 6.8 percent. That 
produces a profit. The Congressional Budget Office has said that the 
Congress could have lowered the interest rate from 6.8 to 5.3 percent 
and save all students $2,200 over the life of their average 10-year 
loan. I am introducing legislation today on my behalf and on behalf of 
others called the Student Interest Rate Reduction Act. This law 
proposes to keep the interest rate at 3.4 percent for subsidized 
Stafford loans beginning July 1 of this year, just as the President and 
Governor Romney proposed. We will pay for that by taking back the money 
that the Congress overcharged students on their student loans under the 
health care law.
  This 1-year solution, as I said, will save students about $7 a month 
on interest payments on their new loans, or about $83 a year. It will 
cost the taxpayers about $6 billion, which will be paid for by 
reductions in savings from the new health care law.
  Let's talk a moment about the real cost of tuition and student debt 
going up--that is, Federal health care policies. When I was Governor of 
Tennessee in the 1980s, the same thing would happen every year as I 
made up my State budget, and it is happening today in every State 
capital in America. I would work through all the things we had to fund 
with State tax dollars--the roads, the schools, the prisons, and the 
various State agencies. Then I would get down to the end of the 
budgeting process and have some money left. The choice would always be 
between Medicaid and higher education--our public colleges and 
universities. I spent my whole 8 years as Governor trying to keep the 
amount we gave to Medicaid down so that I could increase the

[[Page S2734]]

amount for colleges and universities, because I thought that was the 
future of our State.
  In fact, we had a formula then that said if you went to a public 
college or university, the taxpayer would pay for 70 percent of it and 
the student would pay for 30 percent. If we raised your tuition, we 
would raise the State's share. We kept that 70/30. That is now turned 
completely around in Tennessee, where it is closer to 30/70 now; the 
student pays 30 percent and the taxpayers pay nearly 70 percent. This 
shift is because Medicaid mandates from Washington on every State have 
forced Governors and legislatures to take the money they would 
otherwise spend for public colleges and universities and spend it 
instead for Medicaid. As a result, State colleges and universities have 
less money, and to get more money, they must raise tuition.
  When tuition goes up at the University of California, and you see 
students protesting, the reason is because of Washington. As I said, 
President Obama didn't invent this problem--this is a 30-year old 
problem--but he has made it worse. He made it worse with laws that say 
when States have less money, they have to spend more on Medicaid. If 
they are told from Washington to spend more on Medicaid, even though 
they have less revenues, they are going to spend less on something 
else. So they spend less on the University of California, or the State 
University of New York, or the University of Tennessee.
  Last year in Tennessee, State funding for Medicaid went up 16 percent 
in actual dollars; as a result, State funding for community colleges 
and the University of Tennessee went down 15 percent in real cuts. That 
was not a cut in growth. That was a real cut. What did the state 
colleges and universities do? They raised tuition 8 percent. What did 
students do? They borrowed more money.
  I have been trying to get this point across ever since I became a 
Senator. I said during the health care debate that everybody who voted 
for it ought to be sentenced to serve as Governor for 8 years in his or 
her State so they would understand this problem.
  We cannot continue to order the States to spend more for Medicaid and 
expect our great colleges and universities to be affordable and 
continue to be the best in the world. That is the real reason why 
tuition is going up and loans are going up.
  Here are the facts. There are still good options for students. I 
mentioned earlier that the average cost of tuition at a 4-year public 
university in America is about $8,200. For a community college, it is 
around $3,000. There are many scholarships to help them go there. It is 
true that loans are going up to very high levels. It is true that there 
are some abuses here and there--within the for-profit and other parts 
of the higher education system. But it is also true that in the United 
States we not only have some of the best colleges and universities in 
the world, we have almost all of them. Many of them are public colleges 
and universities. They are at risk today. Why? Because of Federal 
health care policies that are hamstringing States and soaking up the 
money that States should be using to fund the universities of this 
country and the community colleges of this country.
  Mr. President, again, I am introducing today the Student Loan 
Interest Rate Reduction Act. It addresses exactly the subject President 
Obama is talking about on the campaign trail these days. How do we keep 
the interest rate on subsidized Stafford loans, the new loans that 
began July 1--how do we keep that at 3.4 percent for 1 year? Governor 
Romney supports that. President Obama supports that. I support that. 
The only difference is how we pay for it. It will cost $6 billion.
  Our friends on the Democratic side have come up with their usual 
methods of paying for it: They are going to raise taxes on small 
business and people who create jobs.
  We have a little better idea on this side, which is, let's take the 
$8.7 billion back that the Federal Government overcharges students on 
student loans today to help pay for the health care law and give it 
back to the students, and let's extend this for 1 year. That will leave 
nearly $3 billion extra, which we can use to shore up the Pell grant 
funding gap that is expected over the next couple of years.
  Respectfully, I say to President Obama, when you visit the next 
college campus, tell the whole story. It is hard to attend and pay for 
college. There are many good options. Debt is up. But in fairness, the 
principal reason tuition is rising, and therefore debt is rising, is 
because of President Obama's own health care policy. He didn't start 
it, but he made it worse. What he has done is put into place a set of 
policies that are soaking up the money States would use to fund public 
colleges and universities and community colleges across this country, 
forcing them to use that money for Medicaid. As a result, the 
universities and community colleges have less money, they raise 
tuition, and that is the principal reason why we have higher tuition 
and higher interest rates.
  The way to stop that would be to either repeal the health care law or 
repeal the Medicaid mandates. That would improve the quality of 
American public higher education, and it would improve access to higher 
education. It would slow down the rising of tuition and slow down the 
rising of student debt.
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