[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.
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