[Congressional Record Volume 158, Number 81 (Friday, June 1, 2012)]
[House]
[Pages H3398-H3399]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                     STAFFORD STUDENT LOAN PROGRAM

  The SPEAKER pro tempore. Under the Speaker's announced policy of 
January 5, 2011, the gentleman from Connecticut (Mr. Courtney) is 
recognized for 60 minutes as the designee of the minority leader.
  Mr. COURTNEY. Mr. Speaker, I assure you that I will not use the full 
60 minutes, but there is an issue that I wanted to spend a few minutes 
discussing today because it is extremely time sensitive.
  As the chart next to me indicates, we are today on June 1, twenty-
nine days away from the increase in interest rates for the subsidized 
Stafford Student Loan Program, a program which today presently offers 
middle class college students loans at a rate of 3.4 percent, and on 
July 1, by law, that number will double to 6.8 percent unless Congress 
acts.
  The situation right now is the result of a measure that was passed in 
2007, the College Cost Reduction and Access Act, which at that time--
again, the statute under the Stafford program required a 6.8 percent 
interest rate. I was part of a group that passed the College Cost 
Reduction and Access Act that cut that rate down to 3.4 percent. For an 
average student using the Stafford Student Loan Program, which carries 
a loan limit up to $23,000 a year for a student, that cut in interest 
rate saved the average student who uses this program about $5,000 to 
$10,000 in added interest cost, obviously a huge number for young 
people in this country who are struggling to try to deal with the costs 
of higher education.
  Again, it was a 5-year bill, and it has a sunset date of July 1. That 
is not uncommon in terms of the way legislation is designed in 
Washington. But in January, President Obama, while he was standing at 
that podium right behind me, reminded the Congress during the State of 
the Union address that this doubling of rates was a few months away. Up 
to this point, we still have not dealt with this issue. And for young 
people who are trying to budget in terms of the upcoming school year, 
young seniors who got their acceptance letters to go to college, the 
failure of this Congress to address this issue and get it done is, 
frankly, completely unacceptable. And the schedule that we've been 
following in this House--for example, this week we had only one full 
session day. At a time when so many issues like this are piling up and 
crying out for action, that is really just unacceptable.
  The good news is that there has been some movement. Since the 
President made his call in January, I introduced legislation to lock in 
the lower rate the following day. We have 152 cosponsors to lock in the 
lower rate at 3.4 percent. About 3 weeks ago, the Republican majority 
did move a bill forward. It was paid for, I think, completely 
inappropriately by dipping into a fund to pay for preventive health 
care. In other words, it took money out of a fund to pay for cervical 
cancer screening, diabetes treatment, all the measures that are 
preventible illnesses in this country. Again, many uninsured 
individuals need that fund to operate to get those tests done and avoid 
higher health care costs.
  Yesterday, there was again additional movement where the Republican 
leadership in the House and the Senate acknowledged that that's not 
going to work in terms of a way to pay for it, and two additional ideas 
have been put forward on the table to deal with the way to offset the 
cost of cutting that rate from 6.8 percent to 3.4 percent. We'll see. 
Next week, the Senate is back, and that really is the Chamber where we 
may see some movement forward in terms of this issue.
  I think it's important to note that this is only a 1-year fix that is 
being proposed right now. For families out there dealing with the cost 
of college, saying that we're going to only provide relief for 1 year 
for interest rates is not a good enough answer.

  We know that because the Federal Reserve--which tracks the amount of 
consumer debt that families are accumulating in this country--just 
yesterday reminded us that student loan debt now exceeds all other 
forms of consumer debt. It exceeds credit card debt. It exceeds car 
debt.
  This is a trajectory which is just going up and up and up. And adding 
to that debt level by allowing interest rates to be at a ridiculous 
level in the economy that we're in right now--you can go out and get a 
30-year fixed rate mortgage on a house for about 3 percent or 4 percent 
right now. Certainly in Connecticut those kinds of loans are being 
offered. There are 10-year Treasury notes being sold at record lows. 
Yesterday, it was reported that 1.45 percent was the yield rate that 
Treasury was selling 10-year notes.
  To have 6.8 percent, with this picture in our economy here today, is 
just unacceptable. The impact it's having in terms of the higher 
education system is tragic for our country. In the 1980s, we were 
number one in the world in terms of graduating people with either 2-
year or 4-year degrees. Today we are 12th. Think about that. The United 
States of America now is 12th in terms of graduating people with 2-year 
and 4-year degrees, and cost is the biggest driving factor that is 
preventing people from going to college and getting degrees.

                              {time}  1400

  When we look at the workforce needs in this country in terms of 
medical professions, in terms of research, in terms of engineering and 
science, the fact of the matter is this country is in an almost crisis 
situation right now in terms of being able to refresh and replenish the 
workforce needs of this country.
  Now, how did we get here? The Stafford student loan program, which 
was created in 1965, was an attempt to try and reach out to families 
and give them more affordable interest rates so that they could pay for 
colleges. From the 1960s to the 1990s it was a variable rate interest 
program that went up and down with interest rates in the economy. In 
2002 the Congress passed a budget law which locked in a fixed rate at 
6.8 percent.
  Why did they do that? Well, that interest revenue, when people pay 
back their loans, actually goes into the Treasury. It goes into the 
coffers of this country. It's almost like a tax, essentially. To cut 
that rate to a lower level requires other places in the government to 
sort of offset the reduction

[[Page H3399]]

of 6.8 percent to a lower rate. The measure that we passed in 2007 
accomplished that with a pay-for because it eliminated a lot of 
wasteful bank subsidies and fees to make sure that that cut from 6.8 
percent to 3.4 percent was actually going to take place.
  We are here today in a situation where student loan debt now is the 
largest challenge that faces middle class families who are trying to 
just do the right thing and give their children the opportunity to get 
the skills that they are going to need to compete in their lives and 
help our economy, by the way, perform in a very competitive global 
environment.
  Yet we have still not come up with a sustainable, long-term path in 
terms of trying to make college affordable. We need to address this.
  My bill, H.R. 3826, locks in the lower rate at 3.4 percent, not just 
for 1 year, but permanently. We also need to look at the issue of 
college costs. We need to start putting incentives out there in terms 
of Federal programs to make sure that colleges are not running wild 
with tuition increases. I think it's important to note that President 
Obama, when he gave the State of the Union address and challenged 
Congress to protect this lower interest rate, he coupled it with a 
number of reforms to the title 4 programs that pay for higher education 
from the Federal Government.
  That basically tells universities and colleges if your tuition rates 
go up at an unacceptable level, you're going to be basically 
disqualified from participating in these programs. That is the first 
time that has ever been cited or suggested as a way of trying to put 
some carrots and sticks into the system right now. Because college 
costs are driving, again, that affordability challenge.
  To some degree they are driving that high loan level, those high debt 
levels that families are almost forced to take on to pay for college. 
It's almost like buying a house now, if you are going to a 4-year 
private college, in terms of paying the bills.
  We need to again not just look at this issue in terms of protecting 
lower interest rates, which again it looks like we may have a glimmer 
of hope of a 1-year fix coming up in the Senate next week, but we also 
need to frankly have a longer-term strategy for providing lower 
interest rates on a longer term basis for middle class families, and we 
need to be looking at what's the driving factor in terms of college 
costs. We need to start creating incentives within the financing system 
to make sure that colleges are doing a better job of managing their 
overhead so that they again aren't just shifting that cost on students 
and their families.
  Again, the stakes could not be higher in terms of success of this 
country. We must as a Nation make sure that we continue to invest in 
our education system, in our higher education system.
  I would close by just citing another benchmark that's coming up in a 
short period of time. Again, as my chart indicates, on July 1, we are 
going to hit the doubling of the interest rates unless Congress acts.
  What's also going to happen, though, on July 2 is that we are 
actually going to observe an anniversary in this country. It will be 
the 150th anniversary of when Abraham Lincoln signed the Morrill Act. 
The Morrill Act was a law that was passed during the darkest days of 
the Civil War, again a time when we were literally going through an 
existential crisis in this country about whether or not we were going 
to survive as a republic.
  Despite all that challenge, President Lincoln was able to look above 
and beyond the immediate and look in the long term and sign into law 
this measure which created the land grant college program. That is the 
program which basically said that each State must establish an 
institution of higher education for the purposes of propagating 
agricultural sciences and engineering.
  What an amazing act for someone, again, whose Nation was fighting for 
its life to see that long term we must continue to look forward, and we 
must invest in our future. Over time, since the Morrill Act was signed, 
we, on a bipartisan basis, have passed the Stafford Act, the Stafford 
student loan program, which I mentioned here. It was sponsored by a 
Republican Senator, Robert Stafford, from Vermont.
  We passed the Pell grant program, named after Claiborne Pell, a 
Democratic Senator from Rhode Island. We passed the Perkins Loan 
Program, which is named after Carl Perkins, a Democrat from Kentucky.
  But over time and even the darkest, most challenging, critical days 
of our Nation's history, we have had leadership in Washington which 
understood that we must keep our eye on the real crown jewels of our 
country, which is our people. We are a Nation that is blessed with 
great material wealth. We are a Nation that is blessed with the 
greatest military fighting force in the world. We are blessed with 
great financial institutions.
  What really makes this country tick is our people, is investing in 
future generations. That is, at the end of the day, what's at stake 
with this issue, which has 29 days for Congress to act and fix.

  I'm an optimist. I think we can do this. I think we have seen some 
movement--took a little external pressure on the political system here, 
with the President's visits to college campuses in Iowa, North Carolina 
and Colorado, and the ticking clock that I have been putting on this 
floor day in and day out, and the 130,000 petition signatures from 
colleges all across the country. We brought those to the Speaker's 
office on day 110. That external pressure has finally gotten some 
movement on this issue. Hopefully next week we are really going to see 
the glimmers of a real solution to making sure that families are not 
going to see their rates double to 6.8 percent.
  Again, our work is not done if we get that measure passed. We must 
deal with long-term sustainable solutions to the issue of higher 
education costs if we as a Nation are going to have any viable future 
and success. We can do this, but it's going to take a lot of bipartisan 
concerted effort to come together and solve this critical problem.
  With that, Mr. Speaker, I yield back the balance of my time.

                          ____________________