[Congressional Record Volume 159, Number 107 (Wednesday, July 24, 2013)]
[Senate]
[Pages S5863-S5894]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                   SMARTER SOLUTIONS FOR STUDENTS ACT

  Mr. HARKIN. Madam President, I ask unanimous consent the Senate 
proceed to the consideration of H.R. 1911, as provided under the 
previous order.
  The PRESIDING OFFICER. Is there objection?
  Without objection, the clerk will report the bill by title.
  The assistant legislative clerk read as follows:

       A bill (H.R. 1911) to amend the Higher Education Act of 
     1965 to establish interest rates for new loans made on or 
     after July 1, 2013, to direct the Secretary of Education to 
     convene the Advisory Committee on Improving Postsecondary 
     Education Data to conduct a study on improvements to 
     postsecondary education transparency at the Federal level, 
     and for other purposes.

  There being no objection, the Senate proceeded to consider the bill.
  Mr. HARKIN. Madam President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. HARKIN. Madam President, I ask unanimous consent the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. HARKIN. Madam President, we are now on the student loan bill, so 
to speak. There is going to be a few hours of debate on the bill 
itself--actually 3 hours. As I understand it, there will be three 
amendments in order under the rule on this bill. So we will probably be 
on this bill for some time this afternoon. But we do want to finish it. 
I know the leader wants to finish it. Both the majority leader and 
Republican leader want to get this finished today, so we will be 
working on this bill for probably the better part of this afternoon.
  I would like to set the stage for it by talking about the situation 
with student loans and why we are where we are right now. First of all, 
I would like to say the bill before us basically is the House bill. 
There will be a Manchin-Burr amendment that will be offered as a 
substitute. I will be supporting that. That is the compromise bill. 
That is the compromise we reached through several weeks of negotiations 
between the Republicans on the Senate side and the Democrats on the 
Senate side and the White House. It was a three-party negotiation that 
went on, and this is the compromise that was reached. So the bill 
before us represents a number of compromises that were made on both 
sides to produce legislation that would give certainty to students who 
borrow money from the Federal Government to attend college this fall.
  As we all know, we have debated several different measures related to 
student loan interest rates for several weeks. This is the closest we 
have gotten to an agreement that represents at least two core 
Democratic principles, our side's principles, related to student loan 
interest rates.

[[Page S5864]]

  I think it is only right to point out that we have had a couple of 
votes on keeping the interest rates at 3.4 percent for subsidized 
student loans for next year. That did not receive the 60 votes needed 
to move. As a consequence, on July 1, the interest rates on subsidized 
loans snapped back from 3.4 to 6.8 percent. We have been working hard 
to try to keep students from paying that 6.8 percent interest and on 
how we could reach some agreement, and that is what this bill does that 
is before us.
  The two core principles we fought for were that the front-end caps--
they have front-end caps to ensure that undergraduate students taking 
out Stafford loans will not pay above 8.25 percent interest even if 
there are extreme fluctuations in the market. I point out that 8.25 
percent is exactly the caps we had on student loans in the 1990s. This 
is not something new or out of line with what we have done before. We 
had 8.25 percent in the nineties, and I might add five times in the 
nineties we bumped up against that cap, so that cap protected students 
five times in the nineties from going above 8.25 percent.
  Graduate students taking out these Stafford loans will have a cap of 
9.5 percent in interest. Parents and graduate students taking out PLUS 
loans, these are the parent loans, will never pay above 10.5 percent. 
That is the first principle, to have these upfront caps.
  Second, the principle we had is to get as close to budget neutral as 
possible. The composition of this bill places us about as close to 
budget neutrality as possible, meaning that billions of dollars will 
not be generated off the backs of students to reduce our budget 
deficit, something that was included in the version of this legislation 
that passed the House and which was a key feature on an earlier 
Republican bill that received a vote in the Senate--not a passing vote, 
it received a vote.
  Again, these are the compromises made on the Republican side. They 
had several billions of dollars to raise on the student loans in the 
future. We did not. So we compromised down. Basically, it is $715 
million over 10 years. Since there is going to be over $1 trillion over 
10 years, $715 billion is not much compared to the $1 trillion in 
student loans that will be taken out over the next 10 years. That comes 
down to about $71 million a year. That is just about as close as we can 
get it to budget neutrality.
  What does this mean for students? It means this fall all 
undergraduate students, subsidized or unsubsidized, will only have to 
pay 3.86 percent interest. That is down from 6.8, down to 3.86 percent. 
That means they will have that interest rate for the life of the loan. 
That is locked in. It will not vary.
  Graduate students will see a 1.4-percent rate decrease from what it 
would be and parents will see a 1.5-percent rate decrease, so in all 
cases a decrease. That means real savings for borrowers. That means an 
average of $1,500 savings for undergraduates, $2,913 for graduate 
students, and $2,066 for parents, again over the life of the loan.
  This bill also includes a provision that requires the GAO to submit a 
report to Congress within 4 months, detailing what the actual cost to 
the Federal Government of administering the Federal student loan 
program is and what the appropriate interest rate should be to avoid 
generating any unnecessary revenue. Again, I am sure people referred to 
it. There was an editorial in the New York Times this morning talking 
about the fact that the government should not be generating revenue off 
the backs of students. We all agree with that. That is why we tried to 
get this as close to budget neutrality as possible. As some will point 
out, under the system the way it is set up over the next 10 years, the 
CBO estimates the Federal Government will make more than $180 billion 
on Federal student loans.
  I might just say, deriving savings was not the intended purpose of 
the Federal student loan program when it began in the 1960s, and it 
should not be a purpose of it now. The purpose should be to keep 
interest rates as low as possible for students and their families. So 
in 4 months, when the GAO submits its report to Congress, I plan to use 
that information to inform us on the reauthorization of the Higher 
Education Act--I will have more to say about that in a second--to get a 
loan system that does not generate money for the government. This 
debate on student loan interest rates will continue, and I hope my 
colleagues will join us in that discussion as we move to the Higher 
Education Act reauthorization next year. As I said, I will have more to 
say about that in a second.

  I have cosponsored this bill that is before us. I will vote for its 
passage. I will oppose other amendments because we have an agreement to 
move ahead. I believe this was the best deal we could get for students 
at this time.
  The bill before us is supported by a number of groups, including the 
United States Student Association, the American Council on Education, 
Rock the Vote, Center for American Progress and Generation Progress, 
Generational Alliance, the National Association of Student Financial 
Aid Administrators, and the Committee for a Responsible Federal Budget. 
Also, this morning we received a letter from the Leadership Conference 
on Civil and Human Rights that supports this with a ``yes'' vote on the 
bill before us.
  I wish to make it clear that I plan to revisit the issue of student 
loan interest rates, along with other facets of the higher education 
system, in order to address the whole issue of college affordability. 
This fall the Senate HELP Committee, which I chair, will start 
consideration on the reauthorization of the Higher Education Act that 
expires this year.
  The interest rates--what we are talking about here today--we attach 
to Federal student loans is an important issue. I don't deny that. It 
is one that deserves our attention, but I want to point out that it is 
just one piece among many that go into college affordability. We will 
be tackling the many pieces that go into the reauthorization of the 
Higher Education Act so we can address the whole issue of college 
affordability.
  When I am in Iowa, I hear from students and parents about the 
financial squeeze they are facing from the spiraling costs of college 
and their anxiety about student loan debt.
  I have charts here. The first chart shows the increase in the cost of 
a public 4-year education over time. It has tripled since the 1980s. If 
we look at that chart, we can see that from 1980 to today the cost of a 
college education has tripled. That is the red line. The blue line is 
the Consumer Price Index. As we can see, our current system is out of 
step with the marketplace.
  The cost of that degree has skyrocketed for students across the 
country. The costs have risen far higher and faster than the rate of 
inflation. Why is this happening? Why has it gone up so rapidly? If we 
look at 1990 to 1991, it just shot up. From about 2000 to now, it has 
really skyrocketed. I think it is legitimate for us to ask this 
question: Why is that happening? It is not just student loan interest 
rates causing that. We have had low student loan interest rates, so 
that cannot be the sole cause. Something else is going on. Again, that 
is why we need to examine that in the Higher Education Act--so we can 
find out why that has happened.
  The second chart I have shows what is happening to our students. The 
average loan debt for a bachelor's degree has doubled since the 1990s. 
In the 1990s the cumulative debt a student would have after going to 
college would be $9,350. Today it is $26,660. That is over a 20-year 
period. Why has that gone up so much? That is why we have to get into 
the whole panoply of issues that affect college affordability.
  In light of this crisis, I have chaired a series of hearings in our 
committee focused on what is being done to curb the cost and how we can 
have strategies to help keep the dream of higher education alive for 
students without giving them a ton of debt when they graduate. To date, 
we have examined promising strategies employed by innovative colleges 
and universities to curb costs while improving student outcomes. We 
have looked at State policies for improving affordability and State 
barriers to innovation, efficiency, and effectiveness. There is much 
room for progress and improvement when it comes to our system of higher 
education. I believe a consensus is emerging on the need to break away 
from business as usual. We cannot keep going on the way we have been 
doing over the last 20 years in funding for higher education.
  Among the many ideas we have heard in these hearings, three major 
themes

[[Page S5865]]

have emerged. First, States are cutting funding to public universities, 
shifting the costs to students, their families, and Federal financial 
aid programs. In all of our hearings--and we have looked at all that 
goes into these charts, such as the increase in costs to students and 
the cost of college--the single largest correlative factor has been the 
decrease in State support for higher education.
  What has become clear--at least to this Senator--is that State 
legislators have figured it out. They can cut their budgets and cut 
their support for public universities, shift the burden back on 
students and their families, the students come to the Federal 
Government and borrow more money, we increase Pell grants, and the 
burden on the student grows because their debt grows. Yet the colleges 
themselves are not stepping in to do anything. There are some colleges 
doing innovative things, but they are not doing enough to control the 
costs. Something has to be done about the States backing off of their 
support.
  The second theme that emerged was that many of our more than 7,000 
degree-granting institutions are not making college affordability a 
priority. It is just not a priority. They are focused on chasing 
rankings, investing in efforts unrelated to academic success, and they 
are failing to respond to a rapidly changing higher education 
landscape.
  The third theme that emerged was that students and families are not 
empowered with accurate, clear, and accessible information about the 
comparative costs, quality, and value when shopping for a college 
education. While college affordability is a complex issue with no easy 
answers, there is much that all stakeholders--the Federal Government, 
State governments, institutions, families, and students--can do to 
increase college access and success and keep the costs down regardless 
of a student or family background.
  Again, we are going to have to look at this in the higher education 
bill. Interest rates are just one piece of it, and that is what we are 
addressing today, but there is a lot more going on than just interest 
rates. We have to look at our system of accreditation. We have to look 
at our campus-based aid programs, the financing of Pell grants, and the 
regulation of the for-profit colleges that my friend from Illinois is 
always consistently pointing out here. We need to look at the structure 
that supports our Federal loan system, from the loan origination 
process to the servicing done by private and nonprofit contractors 
after students have completed their course of study, and debt 
collection should they default. The system we have is complex. I will 
repeat that the interest rate on student loans is only one piece of 
this jigsaw puzzle. It is an important piece to be sure and one we are 
addressing today.
  Throughout the discussions about the interest rates, both President 
Obama and my ranking member and good friend Senator Alexander have 
personally committed to working with us as we take up the 
reauthorization of the Higher Education Act in the coming year so we 
can address all the issues affecting our entire higher education system 
and hopefully enact much needed reforms.
  We all understand how serious and important the issue of 
affordability is for a higher education. I look forward to working with 
Senator Alexander, members of our committee on both sides, and the 
White House in the months ahead to come up with a Higher Education Act 
reauthorization bill that is comprehensive and really gets to the 
bottom of college affordability so we can start to break away from the 
way we have been doing things in the past. As I said, we cannot 
continue on the way we have been doing this.

  There are many who have been involved in negotiating the legislation 
before us today. Compromises are tough sometimes. I have said before--
and I know my friend from Illinois said this at our press conference 
last week--if I were to write this bill and if I could have it my way, 
this would not be what I would write. I understand that. It wouldn't be 
what my friends on the other side would write either. And that is the 
art of compromise--to bring both sides together and get the best 
agreement we can. This is a good agreement. It is good for 
undergraduate students, it is good for graduate students, and it is 
good for their families.
  I thank President Obama for his leadership in negotiating this bill. 
I would also like to thank my friends and colleagues. I thank Senator 
Durbin, who was a great leader in bringing this about. I thank Senator 
Manchin, Senator King, Senator Carper, as well as Senator Alexander, 
Senator Coburn, Senator Burr, and their staffs for all the hard work 
and diligence in putting this proposal together.
  As I said, this might not have been the bill I would have written, 
and I think everybody who has been involved in this would say the same. 
But it is the best we could do. Quite frankly, it is going to lower 
interest rates this year. For undergraduate students, for the next 4 
years it will be lower than 6.8 percent. In the fifth year it goes up 
just a little bit. As I said, as we look at the Higher Education Act 
and as we get this back from GAO in 4 months, we are all going to work 
together to see what exactly is the best path forward.
  We can keep the interest rates low for students this year and into 
the future, and I support this bipartisan Student Loan Certainty Act. I 
encourage all of my colleagues to vote in favor of its passage.
  I am glad to yield for my friend Senator Durbin.
  The PRESIDING OFFICER. The assistant majority leader.
  Mr. DURBIN. Madam President, through the Chair I would like to direct 
a question to the Senator from Iowa. I respect the leadership he has 
shown on this issue and so many issues, whether it is health, 
education, or disabilities. He has been the voice of leadership in the 
Senate for a long time. I know this is his last term as a Senator, but 
I also know he still has one big job ahead of him, and he has talked 
about it--the reauthorization of the Higher Education Act. We are going 
to hold the Senator to that because we need his voice and leadership in 
that room or it won't happen.
  I saw his leadership on this particular issue. Senator Harkin came to 
this negotiation with conservative Democrats and Republicans and sat 
down and said: There are some basics we are going to have to include in 
this before I will sign off.
  I remember this--No. 1, keep the interest rates as low as possible 
for students so that students and their families don't have an 
increased burden.
  As he said, in the next 2 years--whatever category of a student loan 
we are talking about--this bill is a break. For undergraduate students, 
it saves $2,000 in interest over the next 4 years that they otherwise 
would pay if this bill fails to pass.
  The second thing he said: We want a cap on interest rates so that if 
something unforeseen happens, if all the economic predictors are wrong 
and the base interest rate on 10-year Treasurys goes up faster than we 
thought, there will be a cap to protect the students. He insisted on 
it, and we put it in there. For undergraduate students, it is 8.25 
percent. That is a guarantee that it will not go to the high heavens. 
And 8.25 percent has been a traditional ceiling cap.
  The third thing--and I want to make a point of this because it is 
likely to come up in debate. This is an interesting compromise. We 
would dream up scenarios. Well, what if we put the cap at this number? 
What would happen to the interest rates? When it is all over, if we 
calculate it over 10 years, do we break even? We don't want to make a 
penny off of students and their families on student loans. We don't. We 
tried to avoid it.
  I think the best effort of the Senator from Iowa netted some $600 
million to the Treasury over 10 years. This bill is in the range of 
$715 million.
  Mr. SANDERS. Madam President, will my friend from Illinois yield?
  Mr. DURBIN. I am asking a question of Senator Harkin and then I will 
be happy to yield.
  What I would like to put in perspective is $715 million to the 
Treasury over 10 years. Over a 10-year period of time, CBO estimates 
the government will make $1.4 trillion worth of student loans. This 
$715 million, when compared against that, comes out to .005 percent. So 
we cut it as close as we could.
  What does it mean to the students? It means to the students, 
according to the way they factored it out, that for

[[Page S5866]]

each loan a student takes out--$2,000, $3,500, whatever it happens to 
be--there will be on average a surcharge of $2.76. That is what comes 
to $715 million. So the net result of it is--we would like to bring it 
to zero; that was our goal. The way this place works, that was hard to 
achieve. I thank the Senator from Iowa for dedicating himself to those 
things.
  I wish to address him in the form of a question, to be complicit with 
the rules of the Senate: If we fail to pass the bipartisan approach we 
are bringing to the floor, what will be the immediate impact on 
students and families in the United States?
  Mr. HARKIN. Again, I thank my friend from Illinois for his great 
leadership. Before I get right to the answer, I would point out the art 
of compromise, which we did. The Republican proposal we had before us a 
few weeks ago raised $15.6 billion over 10 years. So they have 
compromised a long way too. We have gotten it down to $715 million, 
over 10 years, from $15.6 billion. The Senator is absolutely right. We 
are looking at close to $1.5 trillion over the next 10 years, and that 
kind of puts that $715 million in perspective.
  If we don't pass this today, there is one sure effect: Student loans 
will be almost twice what they would be under this bill--this year, 
almost twice--for them and their families.
  Mr. DURBIN. Interest rates.
  Mr. HARKIN. And that would be true for this year and next year and 
the year after, almost--not quite--this is 3.86, it would be 6.8. So 
they would be paying 6.8 percent on every loan they take out this year 
rather than 3.86 percent, which I might point out also covers both 
subsidized and unsubsidized loans. That is a good deal.
  Again, I say to the Senator that by keeping the rates like that--and 
this is another good point to make and I think people should 
understand. A student borrowing this year at 3.86 percent locks that in 
for the lifetime of the loan--locks that in. It doesn't go to 8.25 
percent. That 8.25 is a cap in case interest rates start going up.
  I would point out to my friend from Illinois that 8.25 is what we had 
in the 1990s, and five times in the 1990s we hit that cap, so we 
protected students five times in the 1990s at that 8.25 percent.
  I say to my friend we have to pass this bill to keep students from 
paying 6.8 percent on their loans this year.


                           Amendment No. 1773

  On behalf of Senator Manchin, I call up his amendment which is at the 
desk.
  The PRESIDING OFFICER (Ms. Baldwin). The clerk will report.
  The bill clerk read as follows:

       The Senator from Iowa [Mr. Harkin], for Mr. Manchin, Mr. 
     Burr, Mr. King, Mr. Coburn, Mr. Carper, Mr. Alexander, Mr. 
     Harkin, and Mr. Durbin, proposes an amendment numbered 1773.

  Mr. HARKIN. I ask unanimous consent that the reading of the amendment 
be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:

   (Purpose: To establish student loan interest rates, and for other 
                               purposes)

       Strike all after the first word and insert the following:

     1. SHORT TITLE.

       This Act may be cited as the ``Bipartisan Student Loan 
     Certainty Act of 2013''.

     SEC. 2. INTEREST RATES.

       (a) Interest Rates.--Section 455(b) of the Higher Education 
     Act of 1965 (20 U.S.C. 1087e(b)) is amended--
       (1) in paragraph (7)--
       (A) in the paragraph heading, by inserting ``and before 
     july 1, 2013'' after ``on or after july 1, 2006'';
       (B) in subparagraph (A), by inserting ``and before July 1, 
     2013,'' after ``on or after July 1, 2006,'';
       (C) in subparagraph (B), by inserting ``and before July 1, 
     2013,'' after ``on or after July 1, 2006,''; and
       (D) in subparagraph (C), by inserting ``and before July 1, 
     2013,'' after ``on or after July 1, 2006,'';
       (2) by redesignating paragraphs (8) and (9) as paragraphs 
     (9) and (10), respectively; and
       (3) by inserting after paragraph (7) the following:
       ``(8) Interest rate provisions for new loans on or after 
     july 1, 2013.--
       ``(A) Rates for undergraduate fdsl and fdusl.--
     Notwithstanding the preceding paragraphs of this subsection, 
     for Federal Direct Stafford Loans and Federal Direct 
     Unsubsidized Stafford Loans issued to undergraduate students, 
     for which the first disbursement is made on or after July 1, 
     2013, the applicable rate of interest shall, for loans 
     disbursed during any 12-month period beginning on July 1 and 
     ending on June 30, be determined on the preceding June 1 and 
     be equal to the lesser of--
       ``(i) a rate equal to the high yield of the 10-year 
     Treasury note auctioned at the final auction held prior to 
     such June 1 plus 2.05 percent; or
       ``(ii) 8.25 percent.
       ``(B) Rates for graduate and professional fdusl.--
     Notwithstanding the preceding paragraphs of this subsection, 
     for Federal Direct Unsubsidized Stafford Loans issued to 
     graduate or professional students, for which the first 
     disbursement is made on or after July 1, 2013, the applicable 
     rate of interest shall, for loans disbursed during any 12-
     month period beginning on July 1 and ending on June 30, be 
     determined on the preceding June 1 and be equal to the lesser 
     of--
       ``(i) a rate equal to the high yield of the 10-year 
     Treasury note auctioned at the final auction held prior to 
     such June 1 plus 3.6 percent; or
       ``(ii) 9.5 percent.
       ``(C) PLUS loans.--Notwithstanding the preceding paragraphs 
     of this subsection, for Federal Direct PLUS Loans, for which 
     the first disbursement is made on or after July 1, 2013, the 
     applicable rate of interest shall, for loans disbursed during 
     any 12-month period beginning on July 1 and ending on June 
     30, be determined on the preceding June 1 and be equal to the 
     lesser of--
       ``(i) a rate equal to the high yield of the 10-year 
     Treasury note auctioned at the final auction held prior to 
     such June 1 plus 4.6 percent; or
       ``(ii) 10.5 percent.
       ``(D) Consolidation loans.--Notwithstanding the preceding 
     paragraphs of this subsection, any Federal Direct 
     Consolidation Loan for which the application is received on 
     or after July 1, 2013, shall bear interest at an annual rate 
     on the unpaid principal balance of the loan that is equal to 
     the weighted average of the interest rates on the loans 
     consolidated, rounded to the nearest higher one-eighth of one 
     percent.
       ``(E) Consultation.--The Secretary shall determine the 
     applicable rate of interest under this paragraph after 
     consultation with the Secretary of the Treasury and shall 
     publish such rate in the Federal Register as soon as 
     practicable after the date of determination.
       ``(F) Rate.--The applicable rate of interest determined 
     under this paragraph for a Federal Direct Stafford Loan, a 
     Federal Direct Unsubsidized Stafford Loan, or a Federal 
     Direct PLUS Loan shall be fixed for the period of the 
     loan.''.
       (b) Effective Date.--The amendments made by subsection (a) 
     shall take effect as if enacted on July 1, 2013.

     SEC. 3. BUDGETARY EFFECTS.

       (a) Paygo Scorecard.--The budgetary effects of this Act 
     shall not be entered on either PAYGO scorecard maintained 
     pursuant to section 4(d) of the Statutory Pay- As-You-Go Act 
     of 2010.
       (b) Senate Paygo Scorecard.--The budgetary effects of this 
     Act shall not be entered on any PAYGO scorecard maintained 
     for purposes of section 201 of S. Con. Res. 21 (110th 
     Congress).

     SEC. 4. STUDY ON THE ACTUAL COST OF ADMINISTERING THE FEDERAL 
                   STUDENT LOAN PROGRAMS.

       Not later than 120 days after the date of enactment of this 
     Act, the Comptroller General of the United States shall--
       (1) complete a study that determines the actual cost to the 
     Federal Government of carrying out the Federal student loan 
     programs authorized under title IV of the Higher Education 
     Act of 1965 (20 U.S.C. 1070 et seq.), which shall--
       (A) provide estimates relying on accurate information based 
     on past, current, and projected data as to the appropriate 
     index and mark-up rate for the Federal Government's cost of 
     borrowing that would allow the Federal Government to 
     effectively administer and cover the cost of the Federal 
     student programs authorized under title IV of the Higher 
     Education Act of 1965 (20 U.S.C. 1070 et seq.) under the 
     scoring rules outlined in the Federal Credit Reform Act of 
     1990 (2 U.S.C. 661 et seq.);
       (B) provide the information described in this section in a 
     way that separates out administrative costs, interest rate, 
     and other loan terms and conditions; and
       (C) set forth clear recommendations to the relevant 
     authorizing committees of Congress as to how future 
     legislation can incorporate the results of the study 
     described in this section to allow for the administration of 
     the Federal student loan programs authorized under title IV 
     of the Higher Education Act of 1965 (20 U.S.C. 1070 et seq.) 
     without generating any additional revenue to the Federal 
     Government except revenue that is needed to carry out such 
     programs; and
       (2) prepare and submit a report to the Committee on Health, 
     Education, Labor, and Pensions of the Senate and the 
     Committee on Education and the Workforce of the House of 
     Representatives setting forth the conclusions of the study 
     described in this section in such a manner that the 
     recommendations included in the report can inform future 
     reauthorizations of the Higher Education Act of 1965 (20 
     U.S.C. 1001 et seq.).

  Mr. HARKIN. Madam President, I yield the floor.


                           Amendment No. 1774

  The PRESIDING OFFICER. The Senator from Vermont.
  Mr. SANDERS. Madam President, I call up my amendment which is at the 
desk.

[[Page S5867]]

  The PRESIDING OFFICER. Without objection, the clerk will report.
  The bill clerk read as follows:

       The Senator from Vermont [Mr. Sanders], for himself, Mr. 
     Leahy, Mr. Whitehouse, Mrs. Gillibrand, Mr. Schatz, Mr. 
     Murphy, Ms. Hirono, Mr. Blumenthal, and Mr. Wyden, proposes 
     an amendment numbered 1774.

  Mr. SANDERS. I ask unanimous consent that the reading of the 
amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:

                  (Purpose: To provide a sunset date)

       At the end of the amendment, add the following:

     SEC. 5. SUNSET.

       (a) In General.--The amendments made by this Act shall be 
     effective for a 2-year period beginning on July 1, 2013.
       (b) Repeal.--The amendments made by this Act shall be 
     repealed on July 1, 2015, and section 455(b) of the Higher 
     Education Act of 1965 (20 U.S.C. 1087e(b)) shall be applied 
     as if this Act the amendments made by this Act had never been 
     enacted.

  The PRESIDING OFFICER. The Senator from Vermont.
  Mr. SANDERS. Madam President, I have a lot of affection for my friend 
from Iowa Senator Harkin and Senator Durbin from Illinois, but I must 
respectfully disagree with them and rise in opposition to the bill.
  I ask for support for an amendment I am offering which is being 
cosponsored by a number of Senators. I wish to thank Senator Leahy, 
Senator Wyden, Senator Whitehouse, Senator Gillibrand, Senator 
Blumenthal, Senator Schatz, Senator Murphy, and Senator Hirono for 
their support for this amendment. I also wish to thank the largest 
educational organization in America, the National Educational 
Association, for their support of this amendment, and I thank the 
American Federation of Teachers for their support of this amendment.
  The truth is that if the bill on the floor is passed without 
amendment, it would be a disaster for the young people of our country 
who are looking forward to going to college and for the parents who are 
helping them pay their bills. The job of the Congress, it seems to me, 
is to improve upon the dismal situation we face today in terms of 
student indebtedness and college affordability. These are major crises 
in this country. Millions of kids leaving school are deeply in debt and 
parents are borrowing at high interest rates to send their kids to 
college. We have a crisis. This bill makes a bad situation worse, not 
better.
  I ask my colleagues to support the amendment I have offered which 
would provide a 2-year sunset to this bill--an approach which would 
prevent student interest rates from soaring and allow us the time, 
through the reauthorization of the Higher Education Act, to deal with 
the issue of student indebtedness in a constructive long-term manner. 
This issue is too important not to go through a hearing process, not to 
go through a committee process. I hope we will pass my amendment, 
supported by eight other Senators, which will sunset this bill in 2 
years and allow us to take advantage of the relatively low interest 
rates now and prevent student interest rates from soaring into the 
future.
  The very sad truth of the matter is that in a number of ways, our 
government--Congress, the White House--is failing young Americans 
today, at all ages. We have the highest rate of childhood poverty of 
any major country on Earth. Almost 22 percent of our kids live in 
poverty.
  I think every working American understands that our childcare system 
is a disaster. If a person is a working-class mom or dad in Vermont, or 
I suspect any other place in this country, it is hard to get the 
quality childcare they need, so that many kids today, because of 
inadequate childcare from zero to 3 and 4, enter kindergarten or first 
grade already years behind where they should be intellectually and 
emotionally. We are failing our young children.
  We are failing our teenage young people as well. Today, the 
unemployment rate for high school graduates is close to 20 percent. 
That is the official rate. For real unemployment, counting those who 
have given up looking for work and those who are working part time when 
they want to work full time, it is even higher than that. What does 
that mean for millions of kids who graduate high school, can't get a 
job their first year out of school, their second year out of school, 
and their third year out of school? What does this mean for their 
entire lives? We are not dealing with that issue.
  I had passed an amendment as part of the immigration bill to provide 
400,000 jobs over a 2-year period for young people. That is a start. We 
have to go a lot further than that. By and large, we are failing 
working-class, middle-class young people today who are desperately 
searching for jobs.
  For minority youth--for African-American youth--if my colleagues can 
believe this, the official unemployment rate for ages 16 to 19 is over 
43 percent--over 43 percent, African-American young people, unable to 
find jobs. That is unacceptable.
  Our goal must be to make sure the youth of this country, if they 
graduate high school and they want to go out into the workforce, are 
able to get decent jobs or if they choose to go to college, to be able 
to afford to go to college, and to make sure our young people do not 
end up on street corners doing drugs--not in jail, not in self-
destructive activity. That is our job, to make sure those who have the 
ability and capability are able to go to college and others are able to 
get meaningful work. Frankly, we are failing in both of those areas. 
When we do that, we fail not only the young people of this country but 
the future of this country because the future by definition is with our 
young people.
  All of us know we live in a highly competitive global economy. If 
this country is going to succeed economically, we need the best 
educated workforce in the world. Unfortunately, compared to much of the 
industrialized world, we are doing very little to make that happen.
  In June, the OECD--the Organization for Economic Cooperation and 
Development--released its annual snapshot on the state of education in 
developed nations. The report showed the United States is losing ground 
to other nations that have made sustained commitments to funding higher 
education opportunities. We are losing ground, and the legislation on 
the floor today, which will result over a period of years in a strong 
likelihood that interest rates for student loans will go up, making it 
harder for moderate and low-income kids to go to college, will only 
accelerate those losses.
  The United States once led the world in college graduates. Thirty, 
forty years ago, we led the world in the percentage of our people who 
were college graduates. In fact, as a result, today those people 
between age 55 and 64 in the United States still lead their peers in 
other nations in the percentage with college degrees--about 41 percent. 
So if a person is between 55 and 64, compared to the rest of the world, 
that age group has the highest percentage of people who are college 
graduates.
  Tragically, over the years, we have lost substantial ground. In 
2008--and this is a very sad story indeed, something that should 
concern every Member of Congress and every American--the same 
percentage of Americans aged 25 to 34--the same percentage of that 
younger group--has a degree compared to the older group of 55 to 64. 
What does that mean? What it means is that for the last 30 years, every 
President, every Governor, every Member of Congress, virtually every 
parent in America has said to our young people: The world is changing. 
Technology is exploding. A high school degree no longer will do it if 
you are going to make it into the middle class.
  That is what everybody has said for the last 30 years. But 30 years 
later, nothing has changed. The percentage of Americans who have a 
college degree today is no higher than it was 30 years ago. The result 
is that other countries have significantly surpassed us in terms of the 
percentage of their younger people who now have college degrees.
  In terms of the percentage of college graduates, we lag behind 
Australia, Belgium, Canada, Denmark, France, Ireland, Israel, Japan, 
South Korea, Luxembourg, New Zealand, Norway, Sweden, and the United 
Kingdom. In other words, where we were once first in the world in terms 
of percentage of college graduates, we are now 15th in the world.
  How do we compete in a global economy if we have descended from first 
to fifteenth in the world in terms of people with college degrees? That 
is why

[[Page S5868]]

on the immigration bill we have people coming to the floor and saying: 
Americans are not educated. They cannot do these high-tech jobs. We 
need people from all over the world to come in to do that work.

  Well, I do not agree with that, but that is the argument out there: 
Our people do not have the education. Does anyone believe in any 
serious way the bill on the floor today is beginning--beginning--to 
address the issue of making it easier for kids in this country to go to 
college? The answer is nobody does because, according to CBO 
projections, interest rates are going to go up, and, in fact, it is 
going to be harder for families to send their kids to college. I will 
get into that in a moment.
  The other very important point to be made--and I think a lot of 
people do not understand this--according to the Congressional Budget 
Office, the U.S. Government is making huge profits--huge profits--from 
college loans. In fact, according to the CBO, the estimate is that the 
U.S. Government will make about $184 billion in profits over the next 
10 years.
  So what do we have? We have a middle class which is disappearing. We 
have poverty at a level as high as it has been in the last 60 years. We 
have millions and millions of families struggling to be able to send 
their kids to college. My parents did not go to college. My brother and 
I were the first in our family to go to college. Millions of families 
are in the same boat.
  What is the U.S. Government doing now? We are helping to balance the 
budget not by asking multinational corporations--that make billions of 
dollars a year in profit and pay nothing in Federal income taxes--to 
pay their fair share of taxes; no, that is not what we are doing. We 
are saying to working-class and middle-class families: Oh, you want to 
send your kids to college? You want to borrow money from the 
government? Well, over the next 10 years we are going to make $184 
billion in profits off of you.
  Let me go on record as saying I think that is a very 
counterproductive idea. It is a dumb idea. We have to get out of the 
business of making profits off of struggling families who want nothing 
more than to be able to send their kids to college.
  Let's be very clear about what the legislation on the Senate floor 
would do. According to CBO--and I fully agree; I do not know what 
interest rates are going to be tomorrow, next year. You do not. Nobody 
does. And the CBO is by no means infallible. But the CBO and most 
economists believe we are leaving this period where interest rates have 
been historically low. Are they absolutely right? I do not know. Could 
they be wrong? Quite possibly. But that is what the CBO is estimating. 
This is what the CBO says.
  The CBO says the 10-year Treasury note on which this entire 
legislation is based is now at 1.8 percent. In 2014 it will be at 2.57 
percent; in 2015 it will be at 3.35 percent; in 2016 it will be at 4.24 
percent; in 2017 it will be at 4.95 percent; in 2018 it will be at 5.2 
percent.
  Everybody has to understand that what this legislation is about is 
basing student loans on a variable interest rate. Interest rates go up; 
student loans go up.
  So let's look at what will happen with student loans under this 
legislation. The good news is that because interest rates are low now, 
for the next few years the interest rate for the subsidized Stafford 
loans will be, in 2013, 3.8 percent; in 2014, 4.6 percent; in 2015, 5.4 
percent; in 2016, 6.2 percent; in 2017, 7 percent, in 2018, 7.2 
percent. That is for undergraduates.
  For the graduate Stafford loans, under this proposal on the floor 
today, in 2015, 6.9 percent; in 2016, 7.8 percent; in 2017, 8.5 
percent; in 2018, 8.8 percent.
  For the PLUS loans--those are for parents who are helping their 
kids--in 2015, 7.9 percent; in 2016, 8.8 percent; in 2017, 9.5 percent; 
in 2018, 9.8 percent.
  Now, does anybody really believe that at a time when families and 
young people are having an enormously difficult time paying for college 
that these interest rates make any sense whatsoever? They do not. They 
are going to put an increased burden on working families and young 
people.
  Today, the average student graduating from a 4-year college leaves 
school $27,000 in debt. If you are paying interest rates of 7 percent 
or 8.5 percent for graduate school, there is no doubt in my mind that 
indebtedness will rise.
  Furthermore, not only is it a question of families and young people 
struggling with enormous debt--on my Web site I asked Vermonters and 
people all over the country to tell me what the impact would be on 
their lives of student indebtedness. We heard just enormously painful 
stories from people who said: You know what. My husband and I wanted to 
have a baby. We cannot have a baby right now because we do not have the 
funds. We are paying off our student debt.
  We heard from people who are going into professions they really did 
not want to go into because they just have to make a whole lot of money 
to pay off their debt rather than doing what was the love of their 
life, what they studied to do. So what we have is a bad situation 
which, if the CBO is correct, will only make that situation worse.
  My amendment is not my preferred option. My preferred option would be 
to do what a majority of the Members in the Senate voted to do, which 
is to freeze interest rates for another year at 3.4 percent while we 
come up with a long-term solution. My Republican colleagues, as they do 
on virtually every piece of major legislation, chose to filibuster that 
bill, and we needed 60 votes. I think we only got 51. A majority spoke 
for the American people, for the young people, for working families, 
but we could not get the 60 votes. That was my preferred option.

  But this approach, at least, and what my amendment would do is to 
say, OK, between 2013 and 2014 we will keep interest rates fairly low--
not as low as I would want it--4.6 percent for undergraduate Stafford 
loans, 6.1 percent for graduate Stafford loans, and 7.1 percent for the 
PLUS program. It is not ideal by any means, but it is a lot better than 
what will likely take place in years to come. So we take the best of 
this bill and sunset it at the end of 2 years.
  So if people say there is no option to going forward as opposed to 
6.8 percent, I say: Sorry, you are wrong. There is an option. That is 
what we have done. We have a 2-year sunset on this bill that would be 
at least a reasonable compromise to give us the opportunity to take a 
hard look at the higher education bill and figure out two issues: how 
we create low-interest loans over a long period of time and, second of 
all, how we, in fact, make college more affordable than it currently 
is.
  Let me be a little bit political, as I finish my remarks, and say 
this: I respect everybody's point of view, and there are different 
points of view here. But I think what a lot of Americans are asking 
themselves--they say: Well, let's see. We just had elections in 
November, and we were told elections matter. We had a candidate for 
President of the United States, Barack Obama, who won a very decisive 
victory, who ran on the platform of saying: Hey, I am going to stand up 
for the middle class. I am going to stand up for working families.
  We had an election in which Democrats, Independents, retained control 
of the Senate. Now there are 54 votes in the Democratic caucus, and 
almost without exception Democratic candidates--I ran--Independents 
stand for working families, stand for the middle class.
  So what I do not understand is, when we have a Democratic President, 
a Democratically-controlled Senate, why we are producing a bill which 
is basically a Republican bill--very close to what the House 
Republicans passed.
  As most people know, the House Republicans are perhaps the most 
conservative majority in the House that we have seen maybe ever--the 
most conservative body. They say: This is a pretty good bill. We will 
accept it.
  Well, if the most rightwing Congress in American history thinks this 
is a pretty good bill, I would hope that many Democrats would say maybe 
there is something wrong with this bill; maybe we can do something 
better than that.
  The other point I would make, as I did a moment ago--and people have 
to understand this--a majority of the Members of the Senate voted to 
keep interest rates at 3.4 percent for another year. Fifty-one Members 
voted for that. Most people assume that 51 out of 100 is a majority. 
But we were unable to pass that legislation because of a Republican 
filibuster.

[[Page S5869]]

  What we have seen on virtually every single important piece of 
legislation is that the majority does not rule in the Senate. We need 
to have a supermajority of 60 votes. The result is legislation like 
this, which could well end up raising interest rates for students and 
their families to an absolutely unacceptable level.
  So let me conclude by saying we have a huge crisis in this country. 
The crisis is that today hundreds of thousands of bright young people 
who have graduated from high school are now saying--now saying--I would 
love to go to college. I can do it. I would like to be a professional. 
I would like to be a doctor. I would like to be a nurse. I would like 
to do one of many professions. I would love to do it. I am smart enough 
to do it. I have the drive to do it. I just come from a family that 
does not have the money to send me to college.
  So for those hundreds of thousands of young people whose dream it was 
to go to college, this legislation only makes that situation worse 
because it will make college even more unaffordable. Let's be clear: 
This is a loss not only to those families and to those young people; it 
is a loss to our country.
  A couple months ago I had the Ambassador from Denmark come to the 
State of Vermont to do some town meetings with me.
  The Presiding Officer may or may not know the cost of college 
education in Denmark in terms of out-of-pocket costs. It is zero. It is 
zero. It is not just Denmark, there are a number of countries around 
the world that have the intelligence to understand that the most 
important thing they can do is invest in their young people. So they 
say to their young people: You do well in school, regardless of your 
income, and you are going to be able to go to the best colleges we 
have. Not only the best colleges but graduate school, medical school, 
law school, and your cost will be zero.
  You know what. I think that is pretty smart. I think investing in our 
young people is investing in the future of our country. That is what 
some countries do. They make college education free in terms of out-of-
pocket cost. Other countries do not go that far.
  I live an hour away from the Canadian border. They heavily subsidize 
college. So we are seeing many American kids now going off to fine 
colleges and universities in Canada, where even for people from the 
United States college costs are less than they are in the United 
States.
  In terms of what we are demanding of young people and parents in out-
of-pocket expenses, there is no country in the industrialized world 
that asks more than we do. The result is that we have seen virtually no 
gain in the last 30 years in terms of the percentage of our people 
graduating from college.
  We have a crisis. It is a crisis which impacts millions of young 
people: those who have given up on the dream of college and those who 
are graduating from college deeply in debt.
  It impacts our entire Nation. It is insane to me that we are 
conceding to other countries around the world and saying: OK, you are 
graduating large numbers of people. You are allowing them to go to 
college. But we in this great country, we cannot do that. It makes no 
sense to me at all. It is bad for the future of this country, bad for 
our economy, bad for millions of families.
  The legislation on the floor today only makes a bad situation worse. 
It is based on variable interest rates. It is, according to the CBO, 
likely that those interest rates will rise. In 2018, we are talking 
about subsidized Stafford loans at 7.25; graduate rates, 8.8; PLUS 
loans, 9.8. Can anybody really come to the floor and tell me this is 
where we want to go as a country? So we have a bad situation which we 
have to address, not make it worse.
  Once again, I wish to thank all of the Senators who have cosponsored 
this legislation: Senators Leahy, Wyden, Whitehouse, Gillibrand, 
Blumenthal, Schatz, Murphy, and Hirono. I want to thank the NEA, the 
largest educational organization in the country, for their support, and 
the American Federation of Teachers for their support.
  Let's stand tall today for the working families of this country who 
believe in the American dream, and that dream is significantly about 
the desire of our young people to do better than we have done. That was 
the dream my parents had. It is the dream that millions of families 
have had. An important part of that dream is to work hard as a parent 
to enable my kid to get a college degree.
  We are failing millions of families right now. This legislation will 
make a bad situation worse. We can do better. We can do better. Let's 
stand with the working families of our country today. Let's reject the 
underlying amendment, and let's pass the Sanders amendment.
  With that, I ask unanimous consent the time during quorum calls be 
charged equally.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. SANDERS. I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mrs. SHAHEEN. Madam President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mrs. SHAHEEN. Madam President, we all know that on July 1 interest 
rates for subsidized Stafford loans doubled from 3.4 percent to 6.8 
percent. I have twice voted to extend the 3.4-percent rates to protect 
our Nation's students. Unfortunately, both times we had those votes the 
extensions were defeated. Without congressional action, the 6.8-percent 
interest rates will stand as current law.
  I think today we are going to vote for a bipartisan compromise to 
keep student loan interest rates low this year. I plan to vote for that 
compromise, but I have some concerns about it. I do want to thank my 
colleagues who have spent many hours coming to an agreement that can 
pass this body. This is a bipartisan compromise, and I think it is very 
important we work together to address this issue. While the compromise 
isn't perfect, our undergrads and our graduate students will be able to 
go to college this fall with peace of mind knowing the interest rates 
are well below those they would otherwise face.
  In fact, this compromise will save $30 billion in interest debt for 
students over the next 4 years. Undergraduates borrowing this year will 
save about $2,000 over the course of their studies, and graduates could 
save between $4,000 and $9,000.
  Today, assuming it is offered, I also plan to vote for the Reed-
Warren amendment to lower the cap on interest rates. I would have 
supported Senator Murray's effort to allocate any resulting savings to 
shore up Pell grants, which would help fund those students who need it 
the most, but I understand we are not going to be able to vote on that 
amendment.
  While today's vote is important to keep student rates low for this 
year's students, I wish to be very clear I do not consider this 
compromise to be a permanent fix for our students. Included in the bill 
is a requirement for a study to be conducted by the nonpartisan and 
independent Government Accountability Office which will analyze the 
cost of running the student loan program. Once we have the results of 
the study, we should use the information to determine what course of 
action is best for our students.
  One thing is very clear: Any solution should not come at the expense 
of our students. Affordable higher education is one of the best 
investments we can make in our country. It is essential to growing this 
Nation's economy, to creating jobs, and to protecting the middle class. 
Our businesses need educated workers to compete in the new global 
knowledge-based economy.
  In an immigration bill the Senate recently passed, which I voted for, 
we increased the number of highly skilled workers businesses could 
bring in because there is currently a shortage in this country of those 
highly skilled workers. I supported that, but that is a crutch, a 
short-term fix. We should be educating American students for these 
high-skilled jobs.
  In my home State of New Hampshire, the student loan debate is a very 
important one. Last year a survey found our State had the highest 
average student debt in the Nation, at $31,408 per student. Nearly 
three-quarters of New Hampshire students have some amount of student 
loan debt--the second highest percentage of students with debt in

[[Page S5870]]

the country. We must protect our students. We should not be trying to 
solve the fiscal challenges facing this country on the backs of our 
students. We can't afford to price middle-class families out of a 
college education.
  Studies show adults with degrees from 2- and 4-year colleges have far 
higher family incomes than adults who have high school degrees. In 
fact, according to a recent study from Georgetown University, people 
with bachelor's degrees earn about $1 million more over their lifetimes 
than those who don't have a college degree. We need to get rid of any 
barrier that stops students who want to pursue degrees.
  Recently, I met a woman named Anne, from Manchester, who had been a 
recipient of student loans. She was able to go to school and get a 
degree because of Pell grants. Anne will quickly tell you that without 
aid she would never have even thought about pursuing a college degree. 
She is now working in a professional capacity and she is contributing 
to her community in so many ways. Unfortunately, Anne is now worried 
about her daughter, a single mother who works part-time and who has 
limited options to pursue her own dream job because of the high cost of 
education. Anne told me:

       These kids are our future. We cannot limit them in this 
     way; student loans should not be an obstacle that is 
     insurmountable.

  She is right. We need to make it easier and more affordable for 
Americans to go to college, not harder and more expensive.
  I also heard from a woman named Patricia. She is 45, a single mother 
with three children under 18 years of age. She is currently a student 
at Granite State College who is relying on loans to get her degree. For 
the past 10 years, she and her family have been in and out of homeless 
shelters. She grew up as the youngest of nine children in a family 
where the option of college was never even considered or discussed. 
Patricia has an incredibly tight family budget. Student loans are 
critical to her getting a degree and ultimately being able to provide 
for her family. Sadly, any increase in student loan interest rates 
could limit Patricia's ability to continue her education.
  The bottom line is clear. We all know it. We have to make college 
more affordable. It is essential for our students, it is essential for 
their futures, and it is essential for the future of this country. If 
we expect to compete in this global economy, we have to make sure we 
have the high-skilled workforce we need, and that means making sure 
those young people who want to go to college can afford to get that 
degree. It is just too important for our country's future to fail at 
this.
  I thank the Chair, and I would just note that I will be voting for 
the bill, but as I said, I certainly hope we are all committed to 
making greater progress and making college education more affordable.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Rhode Island.


                Amendment No. 1778 to Amendment No. 1773

  Mr. REED. Madam President, I ask unanimous consent at this time that 
my amendment, which is at the desk, be called up.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The clerk will report the amendment.
  The assistant legislative clerk read as follows:

       The Senator from Rhode Island [Mr. Reed], for himself and 
     Ms. Warren, Mrs. Murray, Mr. Leahy, Mrs. Gillibrand, Mrs. 
     Boxer, Ms. Stabenow, Mr. Whitehouse, Mr. Heinrich, Mr. 
     Blumenthal, Mr. Franken, Mr. Schatz, Mr. Merkley, Ms. Hirono, 
     Ms. Baldwin, Mrs. Shaheen, Mr. Brown, Ms. Klobuchar, Mr. 
     Wyden, and Mr. Murphy, proposes an amendment numbered 1778 to 
     amendment No. 1773.

  Mr. REED. I ask unanimous consent that the reading of the amendment 
be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:

(Purpose: To provide for interest rate caps for certain Federal student 
                                 loans)

       Beginning on page 3, strike line 9 and all that follows 
     through line 13 on page 5 and insert the following:
       ``(ii) 6.8 percent.
       ``(B) Rates for graduate and professional fdusl.--
     Notwithstanding the preceding paragraphs of this subsection, 
     for Federal Direct Unsubsidized Stafford Loans issued to 
     graduate or professional students, for which the first 
     disbursement is made on or after July 1, 2013, the applicable 
     rate of interest shall, for loans disbursed during any 12-
     month period beginning on July 1 and ending on June 30, be 
     determined on the preceding June 1 and be equal to the lesser 
     of--
       ``(i) a rate equal to the yield of the 10-year Treasury 
     note auctioned at the final auction held prior to such June 1 
     plus 3.6 percent; or
       ``(ii) 6.8 percent.
       ``(C) PLUS loans.--Notwithstanding the preceding paragraphs 
     of this subsection, for Federal Direct PLUS Loans, for which 
     the first disbursement is made on or after July 1, 2013, the 
     applicable rate of interest shall, for loans disbursed during 
     any 12-month period beginning on July 1 and ending on June 
     30, be determined on the preceding June 1 and be equal to the 
     lesser of--
       ``(i) a rate equal to the yield of the 10-year Treasury 
     note auctioned at the final auction held prior to such June 1 
     plus 4.6 percent; or
       ``(ii) 7.9 percent.
       ``(D) Consolidation loans.--Notwithstanding the preceding 
     paragraphs of this subsection, any Federal Direct 
     Consolidation Loan for which the application is received on 
     or after July 1, 2013, shall bear interest at an annual rate 
     on the unpaid principal balance of the loan that is equal to 
     the weighted average of the interest rates on the loans 
     consolidated, rounded to the nearest higher one-eighth of one 
     percent.
       ``(E) Consultation.--The Secretary shall determine the 
     applicable rate of interest under this paragraph after 
     consultation with the Secretary of the Treasury and shall 
     publish such rate in the Federal Register as soon as 
     practicable after the date of determination.
       ``(F) Rate.--The applicable rate of interest determined 
     under this paragraph for a Federal Direct Stafford Loan, a 
     Federal Direct Unsubsidized Stafford Loan, or a Federal 
     Direct PLUS Loan shall be fixed for the period of the 
     loan.''.
       (b) Effective Date.--The amendments made by subsection (a) 
     shall take effect as if enacted on July 1, 2013.

     SEC. 2A. SURTAX ON MILLIONAIRES.

       (a) In General.--Subchapter A of chapter 1 of the Internal 
     Revenue Code of 1986 is amended by adding at the end the 
     following new part:

                  ``PART VIII--SURTAX ON MILLIONAIRES

``Sec. 59B. Surtax on millionaires.

     ``SEC. 59B. SURTAX ON MILLIONAIRES.

       ``(a) General Rule.--In the case of a taxpayer other than a 
     corporation for any taxable year beginning after 2013, there 
     is hereby imposed (in addition to any other tax imposed by 
     this subtitle) a tax equal to 0.55 percent of so much of the 
     modified adjusted gross income of the taxpayer for such 
     taxable year as exceeds $1,000,000 ($500,000, in the case of 
     a married individual filing a separate return).
       ``(b) Inflation Adjustment.--
       ``(1) In general.--In the case of any taxable year 
     beginning after 2014, each dollar amount under subsection (a) 
     shall be increased by an amount equal to--
       ``(A) such dollar amount, multiplied by
       ``(B) the cost-of-living adjustment determined under 
     section 1(f)(3) for the calendar year in which the taxable 
     year begins, determined by substituting `calendar year 2012' 
     for `calendar year 1992' in subparagraph (B) thereof.
       ``(2) Rounding.--If any amount as adjusted under paragraph 
     (1) is not a multiple of $10,000, such amount shall be 
     rounded to the next highest multiple of $10,000.
       ``(c) Modified Adjusted Gross Income.--For purposes of this 
     section, the term `modified adjusted gross income' means 
     adjusted gross income reduced by any deduction (not taken 
     into account in determining adjusted gross income) allowed 
     for investment interest (as defined in section 163(d)). In 
     the case of an estate or trust, adjusted gross income shall 
     be determined as provided in section 67(e).
       ``(d) Special Rules.--
       ``(1) Nonresident alien.--In the case of a nonresident 
     alien individual, only amounts taken into account in 
     connection with the tax imposed under section 871(b) shall be 
     taken into account under this section.
       ``(2) Citizens and residents living abroad.--The dollar 
     amount in effect under subsection (a) shall be decreased by 
     the excess of--
       ``(A) the amounts excluded from the taxpayer's gross income 
     under section 911, over
       ``(B) the amounts of any deductions or exclusions 
     disallowed under section 911(d)(6) with respect to the 
     amounts described in subparagraph (A).
       ``(3) Charitable trusts.--Subsection (a) shall not apply to 
     a trust all the unexpired interests in which are devoted to 
     one or more of the purposes described in section 
     170(c)(2)(B).
       ``(4) Not treated as tax imposed by this chapter for 
     certain purposes.--The tax imposed under this section shall 
     not be treated as tax imposed by this chapter for purposes of 
     determining the amount of any credit under this chapter or 
     for purposes of section 55.''.

  Mr. REED. Madam President, I am pleased to offer this amendment, 
along with Senator Warren and 18 of our colleagues. Our amendment would 
provide the kind of certainty students deserve and that they will not 
receive under the proposed bipartisan Student Loan Certainty Act as it 
is currently drafted.

[[Page S5871]]

  Simply put, our amendment will ensure that students and parents will 
not be any worse off than they would be under the current fixed rates 
of 6.8 percent or 7.9 percent. To illustrate this, let me present a 
chart.
  Under the underlying legislation, Stafford loans for students are 
essentially subject to the same interest rates, and they are depicted 
here. These are the undergraduate loans in yellow and the graduate 
loans in white. We can see in the first year for the undergraduate 
loans it is just under 4 percent, and that is less than the 6.8-percent 
current statutory limit. For the graduate loans, they are up roughly 
about 5\1/2\ percent, which, again, is below that. But very quickly, by 
2015, the graduate loans exceed this 6.8-percent threshold. That is the 
current law. Then it keeps going up and up and up.
  Actually, this chart does not represent the entire impact because the 
last bar represents the estimates not just for 1 year but for 5 years. 
So we can see these increments--the white increments for the graduate 
loans--keep going up and up and up indefinitely. This is permanent 
legislation. This is not a 5-year fix or a 10-year fix. It is permanent 
legislation. A similar process is that the undergraduate Stafford loans 
go up and up and up and up.
  Our legislation will simply say if you want to provide an incentive 
and a benefit for students who are today going to school, that is 
commendable, but at some point we are going to have a much worse deal 
for students than we have just with the current law. So we are 
proposing, very simply, to cap at 6.8 percent the Stafford loans and 
then at 7.9 percent for the parent PLUS loans.
  This is a projection of the percentage interest rates for parent 
loans. Again, 2013, it is below the present 7.9-percent statutory 
limit, but quickly, by 2015, it is above, and then it is indefinite. 
From 2018 to 2023 and beyond, it goes up and up and up and up. Our 
amendment simply says if we want to give everybody a benefit in the 
next several years of lower rates, do it, but let us give real 
certainty that rates will not exceed the current statutory rates.
  As I have indicated previously in my remarks, I wish to commend the 
authors at least for putting in caps on rates.
  Some of the original proposals coming from the Senate Republicans and 
other places had no real caps in place. At least now we have caps.
  I want to particularly thank Chairman Harkin, because he committed 
himself to ensuring that all these loan programs have a cap. Our point, 
though, is the caps are so large that effectively students and parents 
in a very short period of time will be paying much more than they are 
today. These caps are too high. They could go as high as 8.25 percent 
for undergraduate Stafford loans, 9.5 percent for graduate Stafford 
loans, and 10.5 percent for PLUS loans. Those are significantly higher 
than our threshold. We can do better. We want to protect students from 
these high interest rates.
  In Rhode Island, roughly 49,000 students will borrow for this coming 
academic year. They would benefit from this approach, but their 
brothers and sisters, who may be freshmen in high school, will be 
taking out loans when the interest rates will be exceeding the current 
rates.
  Adopting the Reed-Warren amendment means students can benefit from 
these low rates initially, but then we will have the existing statutory 
cap in place for future generations. As it exists now, if you are a 
senior in high school and you are going to college next year, you are 
going to get the benefit of the rate, but your younger brother or 
sister, who may be a freshman or junior in high school, and your 
parents are paying for it in the future, and will be paying 
indefinitely.
  As my colleague Senator Warren has pointed out, they are doing it in 
a situation in which the government is making billions of dollars a 
year on these loans. This is not a question of putting subsidies in. 
Contrary to the history and purpose of the student loan programs, we 
are actually reversing the subsidy. We are saying, No, the students 
pay.
  Education is so important to the future of America, yet we are no 
longer going to invest in it as a Nation. We are going to let students 
pay. That is the way this whole approach has been structured. They 
picked as their benchmark the 10-year Treasury bill. Typically, we use 
the 91-day Treasury bill. Just in the baseline, there is a higher 
interest rate. Then they picked a premium to put on top to compensate 
the government for potential risk of loss. As some of my colleagues 
suggested, we are not quite sure what the premium should be, and we 
feel very strongly that premium is much too high for the actual risks 
and costs of the program. So this proposal has baked in higher interest 
rates for some students after the first 2 years, and for all students 
and parents in the long run.
  I believe what we are doing in the Reed-Warren amendment makes a 
great deal of sense. Many people are struggling in many different ways, 
and particularly students are struggling with student debt. We should 
ensure that the new rate structure does not leave students worse off--
and not just for the first 2 years, but let's be realistic and serious. 
Let's look down the road. This road is taking us to higher and higher 
interest rates for students. I think we can do better. I think we must 
do better.
  I would point out that we have paid for this amendment by putting a 
very small surcharge of 0.55 percent on incomes over $1 million, so 
this is fully paid for, and it will give students the real certainty 
that they will not see interest rates go beyond the present statutory 
limits.
  I think what we should be doing as a Nation is not shifting the 
burden to students but investing through students in our future. We 
know if students are able to go on to college and to postgraduate 
education, they are going to make more money, they are going to 
contribute more to the economy, we are going to be more globally 
competitive, and we will be in a much better position.
  Frankly, that was the wise judgment our parents and grandparents made 
when, in the 1950s, 1960s, and the 1970s, they decided to invest in the 
future of America by investing in higher education.
  I daresay there are very few people in this Chamber who in one way or 
another did not directly benefit from that investment. But now we are 
saying today, No, it is on the students, they are going to pay market 
rate premiums, and, according to CBO numbers, we will be generating 
about $184 billion--the difference between our borrowing costs and what 
the students and families are paying. That is not the way to grow a 
strong, prosperous America.
  Because there have been elaborate studies, we also understand that we 
have a jobs gap already between highly educated individuals and the 
jobs. By 2020, there will be about a 5-million-jobs gap between those 
jobs requiring higher education and the projected graduates in the next 
several years going forward.
  So we have to do much more, and I think we also have to look at the 
issue in a comprehensive way. We have to build in incentives for lower 
costs at colleges and universities. That is not being done in this 
legislation, and I think once we pass it, the likelihood of getting on 
to that issue is diminished.
  We also have to try to come up with ways in which students can 
refinance loans. A trillion dollars of student debt has surpassed 
credit card and automobile debt as the second biggest household debt in 
the country, and that is going to grow. It will particularly grow under 
the underlying proposal. We have to figure out a creative way to do 
that. And, by the way, that is going to cost money. So if one of the 
principles and premises of this whole legislation is we will spend no 
additional money for higher education support, how are we going to fix 
that issue of students and families who are deeply in debt--not just 
those who are carrying the debt today but those who are going to 
accumulate the debt going forward?
  I urge my colleagues to vote yes on the Reed-Warren amendment. This 
will be the certainty that is proclaimed in the title of the underlying 
legislation.
  Madam President, I yield the floor.
  The PRESIDING OFFICER. The Senator from Massachusetts.
  Ms. WARREN. Madam President, I want to start by saying to Senator 
Reed how much I appreciate his leadership in putting forth this 
amendment

[[Page S5872]]

that takes a bad bill and turns it into something that will be helpful 
for our students and for our families struggling with student loan 
debt.
  I also want to say how much I appreciate the leadership of Senator 
Harkin, Senator Durbin, Senator Manchin, Senator King, Leader Reid, all 
of whom have worked very hard and made best efforts under very 
difficult circumstances. We had a better bill that passed the Senate, 
but it was filibustered by Republicans and, as a result, we are where 
we are now.
  Today the Senate will vote on a plan that would fundamentally change 
the way government sets interest rates on student loans. My colleagues 
who support this proposal say it will lower interest rates on loans for 
this year, and that is all that matters. That is the same thing credit 
card companies said when they sold zero-interest credit cards, and it 
is the same thing subprime mortgage lenders said when they sold teaser-
rate mortgages. In all these cases, the bill comes due. Nobody disputes 
the fact that within a few years, according to our best estimates, all 
students will end up paying far higher interest rates on their loans 
than they do right now.
  I want lower interest rates for students. With more than $1 trillion 
in existing student loans, our students are drowning in debt. We must 
find a way to address this crisis by lowering the interest rates, 
refinancing existing student loan debt, and bringing down the cost of 
college. But I cannot support a plan that asks tomorrow's students to 
pay more in order to finance lower rates today. And I cannot support a 
plan that raises interest rates on students in the long term while the 
government continues to make a profit off of them.
  According to official government estimates, the Federal Government 
will make $184 billion in profits off student loans over the next 10 
years under current law. This is obscene. Students should not be used 
to generate profits for the government. We should be doing everything 
we can to invest in students and to offer them the best deal we can on 
student loans, not find more ways to make money off them.
  I am a realist about this. I know that eliminating those $184 billion 
in profits is going to be hard. The government and our Republican 
friends liked having that money to spend. I know that it will take time 
to wring the profits out of the system, and I know it will take 
compromise. But the plan before the Senate today is not a compromise, 
and it doesn't remove a single dime of profits from the student loan 
program. That is not an accident. It was designed that way, on purpose, 
with the high interest rates in the future, to preserve every penny of 
that $184 billion in profits. I want a compromise that actually saves 
some money for our students.
  In fact, the plan we will vote on makes even more money off the backs 
of our students--an additional $715 million over the next 10 years. 
That is right; the total profits of the plan we will vote on are nearly 
$185 billion.
  Some have sought to minimize these profits. They say this money is 
only a fraction of what students will borrow in the next decade. But I 
have spent months talking to families in Massachusetts, and it doesn't 
look small to them--families who are already squeezed by the economy 
and who are fighting to put kids through college, young graduates who 
are struggling to buy a home, buy a car, or to put away a little bit of 
savings in the future. That money should stay in their pockets, not go 
to the government. These students don't think that $184 billion in 
profits is small change. These students don't think adding another $715 
million on top of these already huge profits can be ignored as rounding 
errors. These numbers are not abstractions, they are real dollars 
coming out of the pockets of hard-working Americans. Middle-class 
families work hard and pay their taxes, and now they have to pay an 
extra tax--an extra $184 billion tax to put their kids through college.
  Meanwhile, this plan asks for nothing from our biggest corporations 
which take advantage of loopholes in the Tax Code to avoid paying their 
fair share. It asks for nothing from millionaires and billionaires who 
get away with paying less taxes than their secretaries. It asks for 
nothing from the enormously profitable companies that get billions of 
dollars in subsidies from the government every year. It is our kids--
our kids who are trying to get an education--who will pay more.
  Senator Jack Reed has introduced an amendment that would change this. 
His amendment would substantially improve the plan before us today. His 
idea is a simple one: It would cap interest rates on all Federal loans 
at their current levels. These caps would allow students to get a good 
deal right now while the interest rates are low. But the caps would 
also ensure that when interest rates go up in a few years, as we all 
expect them to, our students will still be protected.
  The Reed amendment is the only way to ensure that no students will be 
worse off under the new plan than if Congress did nothing at all. It 
makes sure we don't pit our students against each other, making 
tomorrow's students pay more so today's students can get a break.
  Senator Reed's amendment creates these protections for students by 
taking a chunk of profit out of the student loan system and replacing 
it with 55/100th of 1 percent--about one-half of 1 percent--surtax on 
people whose annual income is more than $1 million.
  This amendment would turn this bill into a true compromise. It does 
not come close to taking all the profits out of the student loan 
system, as I would like to see, but it is a very good first step in 
that direction.
  Like most of the things we do around here, this is a choice. Anyone 
who says we can't afford this amendment is in effect saying it is more 
important to keep making profits off the backs of our kids than to ask 
millionaires to pay a tiny bit more. These dollars have to come from 
somewhere--college kids or millionaires.
  A vote against this amendment is a vote in favor of higher interest 
rates for our students. A vote against this amendment is a vote in 
favor of making profits off the backs of our students. I don't believe 
that is how we build a future. I believe we build it together.
  I support Senator Reed's amendment, and I urge my colleagues to do 
the same.
  I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. MANCHIN. Madam President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The Senator from West Virginia.
  Mr. MANCHIN. Madam President, as we know, Congress has trouble with 
deadlines. That is why we always seem to be missing them. When we have 
trouble finding a permanent solution, we seem to kick the can down the 
road, hoping to find a solution later.
  We are here today trying to fix the problem we have with the 
government student loan programs because we kicked the can down the 
road last year, and if we do not stop and start fixing things, we will 
continue to do it. That breeds a lot of uncertainty into the minds of 
the families and the children who are trying to go on and better 
themselves. The result was that on July 1 rates on government-
subsidized undergraduate Stafford loans doubled to 6.8 percent. That is 
a fact. That is what we know we are dealing with, and we are trying to 
reverse that.
  Not surprisingly, it set off alarms. My goodness, we all got excited 
about this. What are we going to do? We had a year to do it, but we 
didn't do anything; we just extended it--3.4 percent and only for the 
Stafford subsidized loans and nothing for other loans people were 
taking. When you consider that 11 million students who are trying to 
better themselves are borrowing money every year, we were only talking 
about 1 million. That was all we were trying to help. We forgot about 
everything else.
  It is time to fix it today with a ``yes'' vote on the bipartisan 
compromise we worked out. It is really tripartisan--Democrat, 
Republican and Independent. That is pretty special around here, if you 
can get everybody agreeing and moving in the right direction.
  Let me explain what the bill does and what this bipartisan compromise 
will do. We can lower the rate for all undergraduates--all of them--
from 6.8 percent, which is where it is right now, to 3.8 percent. So we 
understand, that

[[Page S5873]]

means a savings of $2,000 in interest for the average freshman student 
who starts college this year. Remember, doing nothing and voting 
against the long-term fix means that the 11 million students who will 
be borrowing money for this school year will pay a higher rate than 
they have to.
  Let's look at the amount of people we are talking about, and the 
money. This is what we are actually talking about.
  The legislation, the bipartisan plan, has been scored and we know 
this first year saves $8.1 billion that students will not have to pay 
in interest. That we know. For the first 4 years of this plan, 2013 
through 2016, it is $31.8 billion. By doing nothing, that is what we 
are leaving. We are making the students pay that much more by doing 
nothing. Anything else we do other than the bipartisan, this is the 
type of money they will be paying in higher interest rates and more 
obligations on the families.
  All of us understand the importance of education. It is what has made 
America the land of opportunity. All of us want to help students go as 
far as they can with their talent, as far as their talent is going to 
take them. That is what brought so many of us together to come up with 
the tripartisan fix, if you will, for the student loan program.
  We all understand that the student loan rates are only one piece to 
the issue of making college more accessible and more affordable for all 
Americans who want to further their education. We will get to the other 
pieces when we debate the reauthorization of the Higher Education Act, 
on which Senator Harkin has been working so hard. I truly look forward 
to having those discussions, but today we have to know what we are 
dealing with. We are dealing today with something that has an immediate 
impact on the pocketbook of student borrowers and their families--
people who need to borrow money to go to school. That is what is in 
front of us. We talked all over and around it. We are talking about 
accounting principles. We are talking about everything that needs to be 
looked at. But it is not going to change what we are dealing with today 
because this bipartisan agreement truly has savings that families need.
  As I said, it is probably more accurate to call our proposal 
tripartisan, and I am proud to do that with all of us working together. 
If you think bipartisanship is hard work and hard to get around here, 
tripartisanship is like hitting the trifecta; that is the megabucks. We 
are doing something really right when we can get all three sides going 
in the same direction.
  This legislation is a long-term fix that is fair, it is equitable, 
and it is fiscally responsible. We all agreed on a set of priorities 
when we began our negotiations--that is everybody: Democrats, 
Republicans, my colleagues on my side of the aisle, the Democratic 
side, who have other proposals. What we all agreed on is that the 
interest rate should be as low as humanly possible. We also agreed that 
there should be strong front-end caps on interest rates to protect 
student borrowers in high interest rate environments so that it does 
not just run wild with them. It has a cap of 8.25 percent, which has 
been historic for some time. We kept that cap.
  We ensured that the government did not profit or lose money on the 
loans. I think that was a big thing, that we all came to agreement. 
Some of the bills we had, had anywhere up to $16 billion of profit 
built into them. That money was going to go to debt reduction. We said 
basically that every penny we can reduce in the interest, that money 
should go right back toward education for the student, and we have done 
that.
  I admit there is no legislation that is perfect. I have been around 
this process for many years, and I have never voted on a perfect piece 
of legislation. But I tried to get the best we possibly could that made 
a difference and made sure we can get it passed, and we have that 
today. It is a good piece of legislation. Anything else that we think 
needs to be fixed that we have talked about, we can do that when we do 
the reauthorization of the Higher Education Act under Chairman Harkin, 
which will be looking at everything.
  Here is how good this bipartisan--tripartisan--compromise is. The 
undergraduate Stafford loans, both subsidized and unsubsidized, are 
based around the 10-year T-bill plus 2.05 percent, which would yield a 
3.86-percent rate for this year. The current rate is 6.8 percent; now 
we are at 3.8 percent.
  Let me show another chart. Nearly 8 out of 10 undergraduate borrowers 
will have both sub and un-sub loans, while only 1 out of 10 will have 
subsidized loans. That is how many students will have just the 
subsidized loans. That is what we thought we were fixing when we froze 
it at 3.4--that is all the people we helped. I don't think a lot of us 
understood. Some people thought it helped everybody, and it did not. 
Only subsidized is this, the Stafford subsidized. Those who borrow only 
unsubsidized is this. But if you look at those who needed both, this is 
what we are talking about--6.5 million more students we are helping and 
serving through this bipartisan--tripartisan--piece of legislation, the 
compromise.

  This is what we worked to do. How could we help? You want to help the 
middle class? This is where the middle class is. This is where the 
people are who need to have the assistance, this is where they come in, 
and I think we have done a very good job at doing that.
  We still have the PLUS loans. We have the graduate unsubsidized 
loans. Right now the graduate unsubsidized Stafford loans are paying 
6.8 percent. Under our legislation they will be paying 5.4 percent. If 
you look at the PLUS loans today, the PLUS loan current rate is 7.9 
percent. Under our bill it is 6.4.
  One hundred percent--every student--11 million of them who are 
borrowing money--will be benefited by the bipartisan agreement. 
Everybody benefits. That is what we tried to do.
  Our plan keeps in place the IBR, which is the income-based repayment 
plan.
  Let's say you graduate after years and you borrowed a lot of money. 
You have a lot of debt. You get a job that pays $40,000, and you have 
two kids now. We put in a protection that basically says they can only 
charge you--you only have to pay 10 percent of your disposable income. 
With a $40,000 income, with two children, that can be as low as $142 a 
month. Now, $142 a month--let's say that with the economy, the job you 
have that is where your heart and desires are--after 20 years it is 
completely forgiven. After 20 years, you made a good effort and maybe 
50 percent of your loan is still owed. The taxpayers are picking up 
that. When people are saying that we are not helping, that we should be 
subsidizing higher education, we are doing that and I think with 
tremendous help.
  The Congressional Budget Office said our bipartisan proposal will 
save the government $715 billion over 10 years with $1.4 trillion of 
money that will be borrowed, and $700 million--that is over 10 years, 
and that is $70 million a year. That is about as close as they are able 
to come. What that really amounts to--let me give it to you this way. 
It might be better. Over the 10 years, $715 million means that the 
Federal Government--if someone says: Oh, but they are making a profit, 
over 10 years the Federal Government will make $2.76 on each loan. If 
we can get it to zero, we will take it to zero. We don't make a penny. 
That is about as close as we can get working with the numbers we have.
  We should not deny students starting college this fall $2,000 in 
savings for the sake of a principle. You say we are making $2.76 over 
10 years, so they should not have the $2,000 in savings? It doesn't 
make sense to me.
  Chart No. 3. This indicates that the average freshman in 2013 who 
graduates in 4 years will save over $2,000 on our plan--$22,000 versus 
current law, $24,000. In the years ahead, the interest rates on newly 
issued Federal student loans will be tied to the U.S. Treasury 10-year 
borrowing rates plus add-ons to offset costs associated with defaults, 
collections, deferments, forgiveness, and delinquencies.
  What we are talking about is--what they are saying is that rates are 
going to go up. CBO projects this. They projected it before. If 
everything that you are hearing--and they say that rates will go up; 
that is where the difference of about $500 comes in. That is the 
difference. That is in the worst-case scenario that the $500 would come 
in. Setting the rates to the market borrowing

[[Page S5874]]

costs is fair, and it is equitable and sustainable as long as we have 
strong borrower protections, and it is fiscally responsible.
  This way, Washington doesn't wind up profiting from students or 
losing money on them. Depending on the methods of accounting that you 
use--you heard how much money we are making on this and that. Let me 
explain a little bit about the accounting procedure. The student loan 
program either generates $184 billion, if you used the Federal Credit 
Reform Act--and I will say the Federal Credit Reform Act has been the 
way the CBO has scored for the last 23 years. For 23 years that is the 
way it has been done. If you use fair value accounting, which some have 
basically supported and want us to change to--even CBO has pointed 
toward that--there would be a $95 billion loss. There is a $280 billion 
swing between what some people say we are making in excess profit; 
others say we will be losing money, it is not paying for itself, and we 
are still subsidizing at the $95 billion rate.
  That is a tremendous swing. We are not going to fix that. Senator 
Harkin will look at all of this, and we will be able to address all of 
this in the comprehensive bill. We should all agree it is simply not 
fair to make a profit on the backs of students, and we agree on that, 
and that is why no matter what happens in the market in the long-term, 
the Senate compromise--and we fought hard for this--on the front end, 
the Senate compromise includes an interest rate cap of 8.25 percent. 
Much of this is important because there will be approximately $140 
billion in new loans issued every year, which means $1.4 trillion in 
loans will be issued over the next 10 years.
  In just a few short weeks students will be returning to school, and 
they will have plenty to worry about: what books to buy, where their 
classes are, how to haul all their stuff to all the rooms, and much 
more.

  There has been so much discussion and argument. We will be voting on 
amendments that are based on what will happen after 4 years.
  This chart shows what the CBO said the interest rates would be. In 
2003, we start at around 4 percent. They felt they would go up to 5.8, 
to 5.9 percent, and level off for the past decade, which is from 2003 
to 2013. This is actually what happened. If we locked into some of the 
amendments some of my colleagues, whom I respect, are telling us to 
lock into, no one would ever be able to take advantage of these 
historic lows. We are able to adjust that based on the market rate 
rather than just a fixed rate.
  These are the things we don't know, but we know we are going to score 
$31 billion in savings in the first 4 years. We do know that. This is 
how far they have been off before, so there is no science in this. If 
anyone thinks this is the gospel, it is not.
  With a ``yes'' vote on our legislation today, there is one less thing 
students and their families will have to worry about: what the interest 
rate will be this year and how it will be calculated for years to come. 
We all came here to help our constituents do what we believe is right. 
We all agree that ensuring college remains affordable and accessible 
for this generation and future generations of Americans is the right 
thing to do. There simply is no better investment we can make than the 
education of our children and grandchildren.
  We will count on today's students to be the driving force of American 
creativity and innovation in the years ahead. Some bedrock values 
define America, and one of them is pretty fundamental: We believe in 
opportunity. We believe everyone who wants to work hard and play by the 
rules should have a shot to succeed. To make good on that American 
promise--the promise of the American dream--we must do all we can to 
ensure that students can have an affordable education.
  With a vote today on this bipartisan--more appropriately a 
tripartisan--agreement to lower the interest rates on all student 
loans, we will take a large step in the right direction. That is why I 
urge all of my colleagues to support this bipartisan, tripartisan, 
agreed-upon legislation that helps students in the future.
  With that, I yield the floor.
  The PRESIDING OFFICER (Mr. Heinrich). The Senator from Missouri.
  Mr. BLUNT. Mr. President, I rise in support of the effort that my 
friend Senator Manchin has done to reach a conclusion. I hope we reach 
that conclusion today.
  I was a university president for 4 years before coming to the 
Congress. There are 11 million families--between now and the start of 
the school year--who will be making decisions on how these programs 
work, so they are very impacted by what we do. Working together to make 
this happen is important, and I will be supporting that.
  I am glad to be a cosponsor of this bill that deals with 
scholarships, but I wish to talk quickly about one other topic and then 
I have another topic I came to the floor to talk about.


                Remembering Officers Chestnut and Gibson

  Mr. BLUNT. Fifteen years ago this week, we had two of our Capitol 
Police officers killed in this building. Officer Jacob Chestnut and 
Detective John Gibson were killed. An intruder came into the building, 
and these two people, trying to protect and defend others, were killed. 
Later today there will be a moment of silence in honor of them and at 
the same time remembering all of those who do this every day for us.
  I happened to be working in this building on 9/11. I was one of the 
last people to leave the building that morning, and I remember the 
people who were still here when I left were the Capitol Police. I 
remember one of the policewomen I saw as I was going out the door--
Isabelle said: You need to get out of the building as quick as you can. 
But she was still here.
  Officer Gibson actually died in the doorway of an office that was my 
office for a couple of years in this building. I moved into that office 
shortly after he and his family both made the sacrifice that all of 
those who work here to protect us are willing to make.
  The other thing I would like to say is that in light of all of that, 
this building was kept open for people who were not only from the 
United States but from all over the world to come and see. One of the 
things Congress appropriately never talked about after that tragedy 
was: What do we do to keep people out of this building? The discussion 
was: What do we do to let people continue to be in this building, and 
we will be remembering that day.


                              The Economy

  Mr. BLUNT. Mr. President, I rise principally to talk about the fact 
that today President Obama is pivoting back to jobs and the economy in 
a series of speeches in Illinois, Florida, and in my State of Missouri.
  He will be speaking at the University of Central Missouri at 
Warrensburg today, and I am glad he is. I was there recently. This 
campus always hosts Girls State and Boys State. It is one of our great 
schools. Warrensburg is a great community. I am glad he is there, and I 
am glad the President is going to get to see that.
  These speeches the President is giving sound an awful lot like the 
2012 campaign speeches. I think we need to move beyond that. We need to 
not just pivot to the economy, but we need to stick with the economy. 
Missourians and all Americans are concerned about the economy and for 
good reason.
  In June, a Gallup poll found Americans continuing to say the economy 
is the biggest problem facing the country. Certainly, if we look at 
what we ought to be focused on in our domestic agenda of what we are 
going to do for America, private sector jobs have to be at the top.
  The President has pivoted--and I think usually the press and maybe 
even the administration were pivoting to jobs and the economy--to the 
economy and has done that a lot over the last several years. It is sort 
of like he goes to this issue and then he goes away from it. I believe 
that when he is there, he is talking about the right thing, but he has 
to talk about the right thing all the time if he wants the right thing 
to happen.
  There is an old saying that even a stopped clock is right twice a 
day. The President and the administration's focus seems to be like 
that. Occasionally, we come around to the right topic, but then we 
quickly get to other topics.
  In May of this year, the President pivoted to jobs during his middle-
class jobs and opportunity tour. In February, he pivoted to jobs during 
a State of the Union Message. In June of last year, he pivoted to jobs 
during a campaign speech in Cleveland, OH. Aides said he was framing 
the speech but didn't have

[[Page S5875]]

any new proposals. That was the way that speech was described that day.
  In September of 2011, President Obama pivoted to jobs during a speech 
before a joint session of Congress that was held to bring attention to 
jobs, where he said he wanted to vote on a $447 billion jobs package.
  In August of 2011, the President pivoted to jobs during a speech at 
the White House following a Senate debt ceiling vote, and then he had a 
Midwest bus tour.
  In January of 2010, he pivoted to jobs amid news that unemployment 
reached 10 percent in the wake of what I think was clearly a failed 
stimulus plan. It was a stimulus plan that didn't work. During the 
speech, he announced there would be more tax credits for clean energy 
jobs.
  The December before that, he pivoted to jobs during a White House 
forum for business leaders. I think I read somewhere this morning that 
we could count as many as 18 pivots to jobs. We need to pivot to jobs 
and stay with it.
  When the President is talking about private sector jobs, he is 
talking about the right thing, but what he says after pivoting to jobs 
is what matters. Hopefully, tomorrow the President will still be 
talking about jobs. Hopefully, the President will talk about jobs every 
day in the next week and longer until we get this done. We need to stay 
on the economy until we get it done.
  Action speaks louder than words, and unfortunately the record is not 
as good as we would like it to be. We have lagging job creation and 
devastating manufacturing loss. The economy is now adding jobs again 
but barely enough to keep up with the numbers of people going into the 
workforce. Manufacturing has been particularly hard hit, despite the 
President's goal of adding 1 million new manufacturing jobs by the end 
of the second term. I would like to see that happen. If the President 
stays focused on that as the premier domestic topic every day for the 
next 3\1/2\ years, it might, but it will not if he doesn't.
  We have too much debt, and that doesn't help in adding jobs. We have 
added $6 trillion in debt and saw a stimulus plan that added a lot of 
that debt and didn't appear to create the jobs it was supposed to 
create.
  As far as the health care law, the nonpartisan Congressional Budget 
Office estimates 7 million people will lose their coverage because of 
the health care law. The Chamber of Commerce said that more than 70 
percent of small businesses say the health care law makes it harder and 
less likely for them to hire new employees. The Congressional Budget 
Office says the health care law will not reduce the number of uninsured 
below 30 million Americans, but it is going to cost a lot of money in 
holding back full-time jobs.
  I read articles every day in different papers that people are looking 
at part-time jobs rather than full-time jobs because of the health care 
law. Surely that is not what we should be doing.
  There are energy policies that don't make sense: the continued 
blockage of the Keystone Pipeline that would have added tens of 
thousands of jobs just to build it. After it is built, more American 
energy equals more American jobs. The President and administration need 
to embrace that concept of more American energy.
  Republicans in the Senate and House are united in calling for 
progrowth policies such as replacing the President's health care plan 
with something that will work. Encouraging more American energy of all 
kinds--from renewables to solar to wind--is important. We need to also 
understand that traditional sources of energy will be the main source 
of energy for the foreseeable future and that will grow our economy--
approving things such as the Keystone XL Pipeline, stop overregulating 
in ways that hold our national energy policy back.
  Obviously, we need to rein in wasteful government spending, give 
Americans more economic certainty, and simplify. There is much we can 
do. We need to simplify the Tax Code. There is a lot we can do.
  I say to the President, it is time to keep talking about jobs. I hope 
today is the first of lots of days in a row when we are talking about 
jobs but also doing the things that help create private sector jobs, 
doing the things that help create an environment where people want to 
take the chance to create an opportunity because our society needs to 
be about that.
  By the way, it is the private sector jobs that do that. The public 
sector jobs are fine, and I am glad to have one right here, but public 
sector jobs don't pay the bill. They are the bill. Private sector jobs 
are where we need to go, and I encourage the President to stick with 
the pivot this time.
  I note the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The bill clerk proceeded to call the roll.
  The PRESIDING OFFICER. The Senator from Maine.
  Mr. KING. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. KING. Mr. President, I rise to speak on the student loan issue, 
and my time should be allocated to the time of Senator Alexander.
  The PRESIDING OFFICER. The Senator is recognized.
  Mr. KING. Mr. President, we have been hearing really two debates 
around here the last few days--in fact, over the last few days and 
months--about student loans. Both are important, but they are separate, 
and I think they need to be separate and thought of as two separate 
debates as we consider the issue before us this afternoon.
  The first and larger issue is the cost of college. It is too high. 
Everyone agrees to that. In fact, the cost of college--of higher 
education--has exploded in the last 30 years.
  In a former life, I used to interview people for a living on 
television. In the 1980s I interviewed the financial aid officer at one 
of our Maine colleges. He made a very interesting point.
  He said: Angus, if you look back over the last 40 or 50 years, the 
cost of a private college education in the United States has almost 
exactly tracked the cost of a new Ford automobile. In the 1950s, $1,500 
bought a car and a college education. In the 1960s, about $3,000 bought 
a car and a college education. That relationship continued into the 
1990s. Then something happened because today a new Ford is about 
$18,000 and a private college is approaching $60,000, something like 
$58,000.
  That is a real problem for all of us. It is a problem for parents. It 
is a problem for students. It is a problem for the government that 
supplies the loans. It is a problem for Pell grants. It is a problem 
for all of us. It is one we need to discuss. But that is not the issue 
before us today.
  There has been some discussion in this bigger debate about college 
costs and what the Federal role should be. Should it be to support and 
help students go to college? Indeed, we have had this discussion for 
the last 25 or 30 years, going back to the time of Pell grants, which 
were designed to help students--particularly low-income students--go to 
school. We have had various iterations of the student loan program. At 
first it was lodged in the banks, and it was a guaranteed student loan. 
Then some years ago it was made exclusively a Federal loan.
  I can make the arguments--and we have heard some of them on the 
floor, including from the Senator from Vermont, who very eloquently 
made the argument that we need to make college accessible. We should do 
that, but not in the context of the discussion we are having today 
about student loans. It is a larger issue. I am sure Senator Harkin and 
his committee are going to take that up in the reauthorization of the 
Higher Education Act later this year.
  I can be very passionate and persuasive about the importance of the 
affordability of college. In fact, I would argue that the GI bill, back 
in the early 1950s and late 1940s, is one of the most important 
economic development investments this country ever made because it sent 
a whole generation of young Americans to college, and it was the 
mainspring of our great economic growth in the 1950s and 1960s.
  The problem now, though, if we are talking about massive new Federal 
support for higher education--it runs into three problems, it seems to 
me, that we are going to have to examine and think about as we move 
forward in this debate. One is financial, another is political, and the 
final one is economic.
  The financial problem is we are broke. Every dollar we spend--in 
addition to what is being spent now; in

[[Page S5876]]

fact, including about 30 percent of what we are spending now--is 
borrowed. So if we are going to significantly increase Federal grants 
or subsidies to students, they have to come from somewhere else. I 
heard Senator Carper speak yesterday about this.
  He said: Do we really want to say, OK, we are going to cut Head Start 
in order to give funds to students? Are we going to cut somewhere else? 
How are we going to make those kinds of allocations?
  Every dollar must be borrowed, and that is just the financial reality 
we are in today.
  The political reality is we are in a situation of divided government. 
The central reality of our political times is nothing happens in this 
city without votes from both parties. It is simple arithmetic. We have 
a President who is a Democrat. We have a House of Representatives that 
is controlled by Republicans, and we have a Senate with a majority of 
Democrats but with important powers to the minority party. So the 
bottom line from all that is nothing happens without bipartisan votes. 
So as much as we--or any group, whether it is the Democrats, the 
Republicans, or our two Independents--as much as we might want 
something, if it doesn't have bipartisan support, it is simply not 
going to happen. That is the reality.
  That is indeed the reality that drove Joe Manchin and I to begin 
these discussions about 6 weeks ago when we were talking about student 
loans. There was a Democratic proposal which didn't get enough votes, 
there was a Republican proposal which didn't get enough votes, and 
everybody walked away. I was haunted by the experience of the 
sequester, where the same thing happened: Democratic proposal, 
Republican proposal, everybody hates the sequester, but it is 
happening.
  So we believed we had to open some discussions because we have to 
find a way to get enough votes to get a proposal through the Congress 
so students aren't facing way higher interest rates this month than 
they should be. No action, make no mistake about it, means students 
will be paying dramatically higher interest rates than they should be, 
given the current cost of money. Why? Because Congress fixed an 
interest rate.
  I would argue the last thing Congress should ever do is fix an 
interest rate. It will always be wrong--either wrong for the students 
as it is now, dramatically, or wrong for the taxpayers at some point in 
the future. We can't predict what interest rates can or should be, and 
fixing a rate, which is what we are facing now--6.8 percent--is 
always--at this point, as I said, is dramatically wrong for students.
  In terms of the political realities around here, my dad was a 
lifelong poker player. One of the things I learned from him--one of the 
guiding principles of my life--is you have to play the hand that is 
dealt. The hand that is dealt us right now is that it takes both 
Republican and Democratic votes to get anything through the Congress. 
That is the reality, and that defines our ability to get things done. 
It doesn't mean we can't get things done, it just means we can't always 
get our way, and compromise has to be part of our lexicon.
  The final issue about whether we want to create a massive new support 
program for college education is economics. I am not saying this is a 
dispositive argument, but I think it is something we have to think 
about. The explosion of college costs I talked about that started in 
the 1990s corresponded, to a large extent, to the availability of 
additional money for scholarships and loans and grants, and 
the colleges essentially ate it up. We can go through great effort to 
find money to increase Pell grants by $1,000, and we will all feel good 
that we have done something for the students. But if the colleges 
increase their costs by $1,000, nobody wins. The Federal Government and 
the taxpayers are out $1,000. The students are in exactly the same 
position they were in before. They still have to find the difference 
because the money has just been eaten up by the increases in costs.

  I think that is why we have to be thinking about what the 
implications are of the actions we take. Just saying we want to give 
more money to students for college--if, indeed, that money immediately 
turns into higher costs and higher tuition, nobody has gained, least of 
all the students because they end up with this huge debt burden.
  We can and should have this discussion. It is an important one. But 
it is not the discussion before us today. The discussion before us 
today is pretty simple: Do we want to continue a program that has fixed 
rates at 6.8 percent when currently rates are running more in the 3-
percent range?
  In other words, do we want to balance the Federal budget for the next 
4 or 5 years on the backs of our students? I don't think we should do 
that. I think we have come up with a proposal that doesn't do that--
that dramatically benefits students as long as interest rates are where 
they are, and it protects students on the upside.
  I try to always think about problems as if we didn't have all of the 
history and we simply had a blank sheet of paper and said: How should 
we go about this? How should we structure a student loan program in the 
Federal Government if we didn't have all the back-and-forth and the 
history and the fixed rates and all of those things?
  It would seem to me if we sat down in a room with a group of bright 
people, they would say: Well, No. 1, the government is going to have to 
borrow this money that it then lends to the students because we are 
broke. Therefore, in order to be fair to the taxpayers and the 
students, the students should pay what it costs the government to 
borrow the money, plus a little bit for the cost of administering the 
program and the risks of default. That is exactly where we landed in 
this proposal.
  People talk about market rates. Yes, there are market rates, but it 
is the 10-year Treasury bill, which is one of the lowest rates in the 
country. This isn't the prime rate. This isn't LIBOR. This is one of 
the lowest borrowing rates we can ever have. It is the borrowing rate 
for the U.S. Government, which heretofore anyway has had a pretty good 
credit rating. Therefore, the students are guaranteed that they will 
always be below the outside market. If they went to a bank for a loan 
with no collateral, no cosigning, no job, the rates would be much 
higher than what we are talking about.
  By the way, it is important to understand, because there has been so 
much discussion about this, that this is not an adjustable rate 
mortgage. If we can manage to pass this bill and get it through the 
House and get it to the President in the next week to 10 days, once a 
student signs up for a loan this fall their rate for that loan will be 
fixed at 3.86 percent for the term of the loan--for the term of the 
loan.
  It is true that the following year, if they need another loan, that 
rate will be the T-bill plus 2.05 percent for the term of that loan. In 
other words, the loan rate doesn't change each year according to the 
rates. I think that is an important distinction. I think there has been 
some confusion about that. In addition, there are provisions in current 
law which this bill doesn't change that allow for forgiveness of 
student loans under certain circumstances, depending upon how long the 
loan has been in place and the employment a person has, as well as 
limits on how much a person has to pay as a percentage of their income.
  As I said before, I don't believe Congress should be setting rates.
  Let's talk about the effect of this proposal on students. The first 
effect is that it will cut almost in half the rates students are going 
to have to pay for their loans this year, from 6.8 percent to 3.86 
percent, as this side of the chart shows. So a freshman going to 
college starting in 2013--this year--this is what they would pay for 
their total loans under this proposal.
  It says ``bipartisan''; it should say ``nonpartisan.'' This is what 
they will pay under current law. That is a dramatic difference. That is 
money out of the pockets--billions of dollars out of the pockets of 
students over the next 2 or 3 years.
  Everybody says, well, what if rates go up? Rates might go up. They 
might stay the same. They might go down. But even if they go up, under 
the projections of the Congressional Budget Office, here is a student 
starting college in 2017, and they would pay a little bit more under 
our proposal--it is the difference between $24,800 and 24,295--about 
$500. This difference is about

[[Page S5877]]

$2,000. This is money in hand. This is maybe, depending upon what 
happens with interest rates--what is worth more, $1 billion in hand or 
$1 billion in the bush? I think it is $1 billion in hand because these 
are the rates kids are going to have to face right now.
  I think this is a great deal for students. No. 1, it dramatically 
lowers the rates in the early years. No. 2, thanks to the hard work of 
Tom Harkin, who negotiated like a tiger, there is a cap on the upside. 
So students aren't subjected, if rates happen to go way up--as they 
have occasionally but not very often in our recent history--into double 
digits, there is a cap of 8.25 percent.
  So the students enjoy the benefit of the low rates, but their 
exposure to the upper rates, to too-high rates, is capped. I think that 
is a sensible and prudent and beneficial proposal for students.
  The savings to students next year will be something like $8 billion 
or $9 billion; otherwise, if we do nothing this week, that is the 
amount they are going to have to pay.
  The future is uncertain, but I think it is important to talk about 
projections of interest rates because a lot of the discussion is that 
the students are going to have to pay so much more because the CBO 
projects interest rates to go up. By the way, even on the CBO's 
projections for undergraduates, the rates would never hit the cap. They 
would be in the low 7s--very close to where the present rate is.

  But let's just talk about CBO interest rate projections because that 
is what is driving a lot of the anxiety around here. Here is the CBO. 
Let's pretend it is 2003--10 years ago--and we go to the CBO and say: 
What are you projecting for interest rates--just as we did a few weeks 
ago? Here is what they projected. They said: Well, interest rates are 
at about 4 percent, but we think they are going to go up around 5, 5.5, 
6 percent. That is the projection CBO used in 2003. OK.
  The good news is, we know what actually happened. Again, starting in 
2003, here is the actual cost of interest rates. Look at the 
difference. If we were basing our decisions on projected interest 
rates, look at the huge difference that took place, and all of this 
represents money in the students' pockets as opposed to fixing the 
rate.
  So, yes, the projections are that they will go up, but we do not know 
that. I would take money in hand anyday against a possibility that 
there might be a payment later on. And we do not know that. It could go 
either way.
  If interest rates go way up, as I said, the cap kicks in. The cap of 
8.25 percent is very close to the 6.8 percent we have now. It results 
in about--I do not know--$20 a month difference between the cap and the 
6.8 percent, if, indeed, we go all the way to the cap.
  I think this is a prudent and responsible proposal. It is the best of 
all worlds for the students because they get low rates now, and they 
get a cap if rates go up. I think it makes sense for the taxpayers. I 
am perfectly willing to have the debate, to have the discussion about, 
A, what do we do about college costs, and, B, should the Federal 
Government be playing a greater role in terms of support for students? 
I think that is a very honest discussion.
  But this is called the student loan program. It is about loans. And 
the implication of a loan is that it is to be paid back with some 
reasonable rate of interest. Pell grants are grants, and we have tax 
credit programs that are, in effect, grants. This is one part of the 
student aid puzzle, and what we have before us today is a prudent, 
sensible, beneficial program for the students.
  I will conclude by saying the choice is very clear because if we do 
not act on this bipartisan proposal that we believe will have a 
receptive ear in the House of Representatives--we know the President 
supports it and is ready to sign it tomorrow--if we do not move this 
bill, nothing happens, nothing happens during August, students are 
signing up for loans at almost double the rate they should be. I think 
that is unfair to students, and I think they sent us here to solve 
problems. This is one I believe we can tackle. We can and have solved 
it.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from North Carolina.
  Mr. BURR. Mr. President, I would like to be recognized on the student 
loan bill. The time can come out of the Manchin-Burr amendment. I am 
not sure exactly how we are allocating time.
  Let me take this opportunity to thank the cosponsors of the bill: 
Senator Alexander, Senator Coburn, Senator Carper, Senator King, and 
Senator Manchin. Without this bipartisan approach, we would not be here 
today. It has not been lost on me that four of the six cosponsors are 
former Governors. They recognize the importance of education. They 
recognize the importance of students having access to that education. I 
think all of them are stalwarts as it relates to good education, and I 
think they recognize, as do Senator Coburn and I, that this is a good 
bill. It is good policy, the Manchin-Burr-King-Alexander-Coburn-Carper 
bill.
  Let me take a minute to share with my colleagues or remind my 
colleagues where we are today. Senator King just did it. Under current 
law we are at 6.8 percent for all undergraduate students. It is higher 
for graduate students. It is higher for PLUS loans. A month ago, we had 
a bifurcated system where some undergraduates paid 6.8 percent and 
other undergraduates, who were considered subsidized, paid 3.4 percent. 
I would suggest that is morally wrong. I think collectively what we did 
was we said: How can we come up with a system that shows the equity we 
believe in and that provides a financial benefit to all students who 
participate?
  So I say to my colleagues, I want to point out the single most 
important part of this bipartisan bill or nonpartisan bill is the fact 
that for two students seated side by side--one whose parents have a 
different income level than the other one's parents--we treat them both 
the same.
  For the one who has a lower income level, as Senator King said, they 
qualify for Pell grants, for education tax credits, for loan 
forgiveness, for a lot of different things. But from the standpoint of 
the rate the Federal Government charges them to borrow money to go to 
school, we treat them the same. I think that is what we are supposed to 
do.
  If we did not treat them the same--let me back up for a second--and 
we were treating this one at 3.4 percent and this one at 6.8 percent, 
understand that this one can only borrow $3,500 at a subsidized rate. 
Well, you are not going to enter any college today for $3,500. It is 
not going to happen. So you are going to have to borrow a little more. 
If you borrowed the maximum you can get, it is $5,500 in your freshman 
year. So you are going to get $3,500 over here, and you are going to 
get $2,000 over here but you are going to pay 6.8 percent.
  What the bipartisan or nonpartisan bill does is it provides every 
undergraduate with, this year, 3.86 percent. In the case of the 
subsidized student, they are not, as before, borrowing at a lower rate 
for some money and a higher rate for other money, actually subsidizing 
themselves. And for the undergraduate who is not subsidized, they are 
not paying way more than they should for their college loan.
  So what did we do? We used the 10-year bond, with market forces. I am 
not sure there is a fairer way to do it--fairer for the student, fairer 
for the institution, fairer for the American taxpayer. We tied it to 
the 10-year bond, and we got an add-on which is reflective of the cost 
to run the program and the risk of the loan. We hope every student pays 
it back, but that does not always happen. What we tried to be is good 
fiduciaries for the American taxpayer.
  Within that, as Senator King said, they are capped. If you are an 
undergraduate, it is capped at 8.25 percent. It came out a little 
higher than that. But the tradeoff for doing that, in comparison to 
what my colleagues in the House have done, is that when you take out a 
loan this year at 3.86 percent, that is your interest rate for the life 
of the loan. We do not readjust it on an annual basis. This is like 
getting a 15- or 30-year amortized loan for a home mortgage. We are not 
going to come in and change the rules on you and say: Well, the United 
States wants more interest in the future. But it does mean, just like 
in a home mortgage purchase, if you buy one this year, the likelihood 
is, the one you buy next year might have a different interest rate 
because the market has changed.

  I think the American people can deal with that because it is 
predictable. It

[[Page S5878]]

brings with it some certainty. You can calculate it on your own. As my 
colleague said, the last to set rates is the Congress of the United 
States. We should not be in that business. It should be market forces. 
With this legislation, it will be.
  I sat over here trying to think of just the one phrase I would say to 
my colleagues is the primary reason they should support this bill and 
provide this benefit for the American people. I wrote down two words: 
financially sustainable. You see, in 2007, Congress created the current 
student loan program rate. A year ago--after we had extended the 
program because it ran out for 2 years--we said: Well, we are going to 
fix it. We are going to have a long-term solution. Then, all of a 
sudden, we did a 1-year extension. The Senator from West Virginia was 
the most vocal person. He said: What happened? We were going to fix it. 
We did not fix it. Thank goodness that is why, when it came up this 
year, there was such outcry over the fact that now is the time to fix 
it if we are going to do it. Let's go ahead and fix it.
  Well, what is the test of: Did we fix it? I would suggest to my 
colleagues, it is financial sustainability. Can this withstand the test 
of time? Today we need that certainty from the standpoint of Federal 
spending, from the standpoint of the American taxpayer. But we also 
need it from the standpoint of America's children.
  We are speaking as much to the 10-year-old as we are to the 18-year-
old. The 18-year-old may be a freshman next year. The 10-year-old has 
aspirations, down the road 8 more years, that they are going to have 
the ability to go to college. We want to provide them with the 
certainty that there is going to be a student loan program out there 
that is equitable and fair that they can participate in and not 
question whether, in fact, it will exist. I think with the option we 
have on the table, we will be able to say that from one generation to 
the next.
  I know we will consider this afternoon a couple of different options. 
I want to urge my colleagues. I think there will be two options from 
the standpoint of plans you can choose. If you believe equitable 
treatment is right, then the bipartisan bill is the one you need to 
support. If you believe financial sustainability is important, then the 
bipartisan bill is the one you need to support.
  I think if you tick down all the things you probably ought to look 
at--what makes it most affordable; what is best for the students--I 
think what you will find is it is the bipartisan bill.
  There has been a lot of work put into making it a long-term solution. 
I want to urge my colleagues. Congress changes every 2 years. That is 
the length of ``long term.'' But let's not put into law a sunset on 
this in 2 years. That is the other amendment. Why would we say we have 
come up with a great plan, one that sort of passes the test of 
equitability and sustainability, and then turn around and say: But we 
are going to sunset it in 2 years? Congress has the ability, with every 
new Congress, to look at any piece of legislation and change it. Let's 
make that the function of what we learn from this and not prejudge it 
and say: Let's cut it off in 2 years.
  I am going to conclude because my colleagues are here to speak on the 
program as well. I thank the cosponsors--the four Governors and Senator 
Coburn. Without their help we would not be to this point. I thank the 
leadership on both sides of the institution--the majority leader and 
the minority leader and those who have brokered the ability for us to 
be here today. Without them, we would not be considering what I think 
is the best piece of legislation to address the challenges we have for 
students in need of loans for college this year and future years.
  With that, I yield the floor.
  The PRESIDING OFFICER. The Senator from North Dakota.
  Mr. HOEVEN. I come to the floor today to speak again in support of 
the permanent solution to the student loan program. Like my colleague 
from the great State of North Carolina, I think that is exactly what we 
have with the bipartisan Student Loan Certainty Act.
  I want to acknowledge all of those who worked so hard to come 
together and support this legislation. It is actually not bipartisan, 
it is tripartisan. Former Governor King is an Independent, so you have 
Republicans, Democrats, and Independents all in support of this 
legislation. That is what it takes. It takes people coming together 
across the aisle doing good work. That is what they have done here to 
put this legislation together. I am pleased to be supporting it.
  I come today to call on all of our colleagues to support it as well. 
The plan provides students with dependable low-cost financing on a 
long-term basis. That is the key. This is a long-term fix. It is called 
the Student Loan Certainty Act because it provides just that, it 
provides certainty for students and for families.
  Again, let's take a minute to review how the plan works. The plan 
would tie all student loan rates to the 10-year Treasury note rate to 
reflect both current market and employment conditions. For this year 
that rate index would be 1.81 percent. Then both subsidized and 
unsubsidized Stafford loans would be 2.05 percent over that rate. 
Graduate student rates would be 3.6 percent over the 10-year Treasury 
rate, PLUS loans would be 4.6 percent over the Treasury rate.
  It is important to note that the rate on those loans is then fixed, 
so you have that certainty when you take out the loan. You know what 
the rate on that loan is going to be for the life of the loan. It is 
important for our borrowers.
  Let's take a minute to compare this program with the existing student 
loan program. Subsidized Stafford loans right now are charged at 6.8 
percent. It was 3.4 percent, but now it is 6.8 percent, because as my 
colleague identified the program had expired.
  We are in this situation where we are going with short-term 
extensions. So we faced these periods like right now where the program 
has expired, so the rate for Stafford loans is 6.8 percent. Under this 
program, that goes to 3.86 percent this year--3.86 percent compared to 
6.8 percent.
  The same thing for unsubsidized Stafford loans. Now 60 percent of the 
borrowers, the undergraduate borrowers, borrow unsubsidized Stafford 
loans. A lot of the lower income students who borrow subsidized loans 
also borrow unsubsidized loans. They were paying that 6.8 percent even 
before the program expired. For all of those undergraduate students, 
the rate goes down to 3.68 percent. That is a big-time savings for 
undergraduate students. Furthermore, the program is capped at 8.25 
percent, so they have the certainty of a cap as well. They save money 
now. As was pointed out by my colleagues, they save money now and they 
have the certainty of a cap as well.
  There are caps for both the graduate students and for the PLUS loans 
that parents take out as well. In addition to the caps, there is 
another safety net in the program. The other safety net in the bill is 
the income-based repayment level. Under the income-based repayment 
level provisions, student loan payments are limited to 15 percent of 
income. Any balance remaining on the loan after 25 years is forgiven. 
So you have both safety nets. You have the caps and you have the 
repayment limit provision to protect borrowers.
  This program is designed solely for students and their families. Let 
me repeat that. This program is designed solely for students and their 
families. Unlike the existing student loan program, it does not 
subsidize Federal health care or any other program. It is for the 
students and their families alone, period. Again, as my colleagues 
noted, a year ago we extended the student loan program. I was actually 
a member of the conference committee for MAP-21, the Department of 
Transportation reauthorization legislation. In that legislation we not 
only reauthorized the DOT budget, we also reauthorized Federal flood 
insurance as well.
  In addition, we extended for 1 year the reauthorization of the 
student loan program. The reason we extended the student loan program 
for 1 year was so we could come up with a permanent solution, not so we 
could come up with another short-term extension but specifically so we 
could come up with a permanent solution. That is exactly what this is.
  The bipartisan Student Loan Certainty Act provides that certainty for 
students, for families. It is a long-term permanent fix for our 
students. So I join with my colleagues and I call on

[[Page S5879]]

both sides of the aisle, all of us, to come together. Let's fix this 
for our students. Let's get it in place. Let's get it over to the 
House. I believe they will pass it as well. Let's have this ready for 
our students as they are preparing to enter college this fall.
  With that, again, I thank everyone who has worked so hard on this 
legislation.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Tennessee.
  Mr. ALEXANDER. I ask unanimous consent that after I speak for about 
10 minutes, the Senator from California be recognized for up to 30 
minutes, and following her, the Senator from Oregon be recognized, Mr. 
Merkley.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. ALEXANDER. Mr. President, I think the Senator from Maine, the 
Independent Senator from Maine, probably said it best when he observed 
on the floor and in private conversation that if you took four or five 
of us and said forget that you are elected to public office, here is a 
problem to be solved, we would have come up with something similar to 
the solution that the President, the House of Representatives, and the 
bipartisan proposal on the floor today. This is a very good solution on 
a very big problem that affects millions of families and about 9 
million undergraduate students who are headed to college this year.
  The bipartisan proposal makes it cheaper, simpler, and fairer for 
students going to college. It makes their loans more certain, because 
it locks in a rate for the life of the loan. It ends the political 
football game which we play every other year, it seems, on student 
interest rates and solves the problem permanently.
  It is based upon an idea recommended by President Obama, passed by 
the House of Representatives, and endorsed by the bipartisan group that 
has been working on it. I wish all of the major problems that came 
before us could be solved in this way. As far as cost goes, it is a big 
difference. Two-thirds of all federal loans are undergraduate loans. 
There are about 11 million borrowers who will take out about 18 million 
loans, because students take out more than one loan.
  For all of the undergraduate loans, about two-thirds of the loans, 
the rate of the loan will be cut about in half, which means if you get 
a loan this year at a 3.86-percent rate, that is the rate that is 
locked in for the entire life of the loan. It is simpler and fairer 
because there is a single rate for all undergraduates. Before, we had 
one rate for a subsidized loan and another rate for the unsubsidized 
loan. That is confusing. It was unfair, because 80 percent of the lower 
income students who had the subsidized loan also had an unsubsidized 
loan. So now everybody who shows up at the University of Tennessee and 
borrows money, if they are undergraduates, all of their loans will have 
the same rate.
  It is fair to taxpayers because we asked the Congressional Budget 
Office to comment on what it costs the government to borrow the money 
and administer the loan, take into account the cost, and try to come as 
close to zero as possible to the cost of issuing loans for the 
taxpayers. They have done that.
  It is fair to students because we also asked the Congressional Budget 
Office to do the same thing for students. They said, we are loaning 
more than $100 billion a year over $1 trillion over 10 years, so help 
us find a formula that comes as close to zero as practical so we do not 
overcharge students and make money on the backs of students. They came 
within seven-tenths of 1 percent in their estimates, which is only an 
estimate, and for all practical purposes that is a rounding error. That 
is a good-faith effort to get to zero in terms of fairness to the 
taxpayers and students.
  But I would want to say to those who suggest it is not fair to 
students, let's keep in mind a few things. First, thanks to Senator 
Harkin and many of the Democratic Members of the Senate, there are caps 
on the loans. So if rates go up too high, there is a limit on how high 
they can go.
  Second, there is, as has been mentioned, the income repayment plan 
which means that under the existing law today, if you take out a 
student loan and then you get a job, you only have to pay back about 10 
percent of your disposable income. That is not all of your income, that 
is after you subtract your living expenses and your taxes, about 10 
percent of what is left. If that is not enough, after paying it back 
over 10 or 20 years, depending on whether you have a public or private 
sector job, the government forgives it. So there is that cap on there 
as well.
  Then there is the interest subsidy. About 40 percent of the loans are 
subsidized for lower income students, which means the government, the 
taxpayer, pays the interest while you are in college. So if you are a 
low-income student at the University of Tennessee, you take out a loan, 
the government will pay your interest the whole time you are in 
college.
  Then there is the Pell grant. We spend about $35 billion a year of 
taxpayer money on Pell grants which go to low-income students. So a 
student at the University of Tennessee may have a Pell grant of up to 
about $5,500 or so. They might have a Hope scholarship in the State 
another $3,000. The tuition at the University of Tennessee is about 
$8,000 or $9,000. At the community college it is about $3,000 or 
$4,000. So you can see there is relatively a lot of financial aid out 
there before students borrow these low-rate student loans that 
taxpayers are making available to 9 million students at a rate of 3.86 
percent for undergraduates.
  Then there is one other aspect in which this is favorable to 
students; that is, the accounting system that we use. I have heard some 
say the government is making money on the backs of students. Let me try 
to put that in the simplest form I can. All we are doing with the 
proposal today is resetting the rates, a very simple bill with a few 
pages. It is on top of a student loan system with a lot of cash going 
in and out of it, $100 billion going out this year in new loans, maybe 
about as much coming back in, being repaid from old loans. There are 
two ways of accounting for that cash back and forth to determine 
whether it benefits the taxpayers or whether it benefits the students.
  Under the law, we have something called the Federal Credit Reform 
Act, which says the taxpayers are benefiting to the tune of about $185 
billion over 10 years. That is correct. That is exactly what it says. 
Not from what we are voting on today but for the underlying system that 
already exists.
  But the Congressional Budget Office has said that is not the way they 
recommend measuring how we count the cost to the government of loaning 
money. To be specific, the Congressional Budget Office says the Federal 
Credit Reform Act estimates do not provide a comprehensive measure of 
what Federal programs actually cost the government, because they do not 
take into consideration the market risk.
  CBO says that adopting a fair value approach would provide a more 
comprehensive way to measure the cost to the Federal credit programs 
and would permit more level comparisons between those costs and the 
costs of other forms of Federal assistance. The Congressional Budget 
Office says: We already use that fair value approach, which includes 
taking into account the market risk with such things as the 
International Monetary Fund, the IMF, the Troubled Asset Relief 
Program, the bailouts, as we called them in 2008. CBO uses those with 
Fannie Mae and Freddie Mac.
  In other words, the nonpartisan group we rely on to advise us about 
money says that if we actually use the right accounting tools, the 
current student loan system benefits students to the tune of about $95 
billion over the next 10 years, not taxpayers. So there is another 
benefit to students. It is not true that under the recommended form of 
evaluating the cost to the government that taxpayers come out better 
than students.
  One other thing I would like to say--or two other things. One is, I 
would like to compliment those who have worked on this. My colleague 
Senator Harkin, who is chairman of the Education Committee here in the 
Senate, argued forcefully for caps. I congratulate the President for 
including this idea in the budget and forcefully supporting it.
  I congratulate the House of Representatives. I suppose it is not lost 
on anyone the Senate is run by Democrats and the House is run by 
Republicans.

[[Page S5880]]

This is a bipartisan proposal. I like the sound of that. I think that 
shows we can get results done when we keep our eye on the ball.
  I especially compliment Senator Burr, Senator Coburn, Senator 
Manchin, Senator King, and Senator Carper for working carefully on 
this, and Senator Durbin for his leadership in putting this together.
  As most speakers have said, it is true that we have a larger question 
before us. Do we need to make some changes in student loans? It is a 
lot of money--$100 billion a year. That is a lot of money. We need to 
make sure that it is available in the right way and that students 
aren't borrowing too much.
  Right now, if you are 20-year-old and you show up at the University 
of Tennessee in Knoxville and you want $5,500, you get it. The 
university can't say to you: I am sorry, Lamar, we don't think given 
your circumstances you are going to be able to pay that back in 10 
years. I can say: Give me my money.
  This is what the law says. Maybe we need to take a look at that and 
we need to be careful about our facts.
  The Federal Reserve, for example, says that 70 percent of borrowers 
with student loans today--we are in the year 2012, in the fourth 
quarter--have a balance of less than $25,000. Seventy percent of all 
student loans at the end of last year had a balance of less than 
$25,000. Forty percent had a balance of less than $10,000.
  The trend is going in the wrong direction. Some students are 
borrowing too much money. But the average undergraduate loan debt is 
about $25,000--that is the average debt--and the undergraduate student 
can't really borrow more than $31,000, and that is two-thirds of the 
loans.
  So while there may be some problems with the student loan program--
and I, for one, think some students borrow more than they should--we 
have 6,000 institutions out there, from the Nashville Diesel College, 
to Harvard, to Notre Dame, to the University of Tennessee, and we need 
to be careful that we understand exactly what the problem is, that we 
focus in on it, we don't apply a lot of mandates from Washington, and 
that we work with the colleges and universities. We need to find those 
universities, such as Tennessee Tech University, where they have a very 
low level of student loans and others where they may have loan rates 
that are too high. We need to make sure students don't saddle 
themselves with too much debt.
  But when we have a 20-year-old in Knoxville showing up who is 
entitled to $5,500 in loans for a community college tuition that only 
costs $3,000 and he or she can put the other $2,500 in his or her 
pocket and the community college can't say no, well, that is one of the 
reasons many community colleges have gotten out of the loan business--
because they think that is wrong for the student. If this is the case, 
then we in the Senate ought to look at that. Senator Harkin and I are 
committed to looking at student loans in the reauthorization of the 
Higher Education Act.
  For today, if the Senate does what I hope it does, this will be a 
victory for students. It makes loans cheaper, simpler, fairer, and more 
certain. It stops this annual business of political football with the 
student interest rates. It gives students a low interest rate that they 
can lock in over time and a cap at the top so that if rates spiral 
through the roof, student loans won't spiral through the roof. It is 
done in the context of a larger system that includes Pell grants and 
interest subsidies for low-income students. If it were based upon an 
accounting system that is recommended by the Congressional Budget 
Office, it would tilt the whole program to the advantage of students to 
the tune of an additional $95 billion over the next 10 years.
  I congratulate all those who have worked on it, from the bipartisan 
sponsors, to the Republican leadership in the House, to the Democratic 
President of the United States.
  I hope that we adopt it by a big vote and that the 9 million students 
going to college this fall will have the advantage of planning their 
long-term futures with the lowest possible interest rate on 18 million 
student loans.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from California.
  Mrs. BOXER. Mr. President, I rise in opposition to the so-called 
bipartisan deal. I have very strong reasons for opposing it and 
supporting the alternative, which is the Reed-Warren alternative.
  The Senator from Tennessee said he likes the sound of bipartisan 
deals. So do I. It feels good to get things done around here in a 
bipartisan way. But that doesn't mean, because it is called bipartisan, 
it is the right thing to do. Sometimes Democrats will have the right 
idea, sometimes Republicans will have the right idea, and we debate it.
  I think it was interesting to hear Senator Alexander's comments. It 
was a very interesting speech because it was part of--you know, saying 
that it is wonderful and we are going to help students on the one hand; 
on the other hand, he talks about changing the way we are doing our 
accounting to crack down on students; and then he says that in his 
State a student can get a $5,500 loan even though it only costs $3,000. 
What about the books they have to buy? What about transportation? What 
about all the other out-of-pocket expenses?
  So I listened to my friend from Tennessee, and I know he is a leader 
on education, but I think he had kind of a dual message: On the one 
hand, it is wonderful to help our students. Well, maybe it is just too 
much of a risk.
  I have to say that according to the information I have from my 
experts, it is pretty tough when you take out a student loan. The 
Federal Government, if you don't pay it back, can garnish your wages 
and it can do lots of other things.
  I am opposed to this bipartisan deal and strongly support the Reed-
Warren measure.
  I am pleased that a lot of people are listening to this debate 
because it is very important. I am going to read some of the criticisms 
of this bipartisan deal that come from outside groups.
  The first is the National Association of Graduate-Professional 
Students. This is what they said:

       This bill falls short in preventing higher student loan 
     interest rates, especially for graduate and professional 
     students. A cap of 9.5 percent for graduate and professional 
     students offers no guarantees that our rates won't 
     significantly increase in the future. We should be 
     encouraging students to enter higher education to help keep 
     our economy growing, not deterring them with higher interest 
     rates.

  The Young Invincibles also oppose this bill, writing:

       Even as the Federal Government makes $184 billion off the 
     Federal loan program, students and families will be forced to 
     pay more under this bill than current law.

  If you let the current law exist, at the end of the day, because of 
the difference in caps, students will be better off in the outyears and 
into the future. For anyone who says this is temporary, make no mistake 
about it--Republicans have said this is permanent. We may revisit other 
things, and I hope we do because there is a lot we should look at, such 
as the ability of students to refinance their loans. There are many 
other things I hope we can work on. But this particular deal, if you 
look at the Republicans' own words, is a permanent deal.
  U.S. Public Interest Group says:

       We oppose S. 1334, the Bipartisan Student Loan Certainty 
     Act, because it is worse than current student loan policy. 
     Current law includes an unjustifiable 10-year revenue stream 
     of $184 billion flowing directly from student borrowers to 
     the Federal Government. [This bill] does not address this 
     problem. Instead, it exacerbates it, generating an additional 
     $715 million in new revenue off the backs of student loan 
     borrowers to pay down the deficit.

  They close their comments by saying, ``Enough is enough.''
  I am sure people listening to this debate could be a bit confused 
about exactly what we are talking about. I am going to try to go 
through some of the facts surrounding this debate. I think it is 
important that we understand what students are feeling out there. I am 
going to read a few.

  In California, Amy and Christian Diede owe over $82,000 in student 
loans. Amy, who has a master's degree in psychology, and Christian, a 
cardiovascular nurse, say:

       It's like carrying a big backpack filled with bricks all 
     over the place, and I can't ever let it go. It's always 
     there. I may get rid of a few bricks, but there's always 
     going to be more. I don't see the student loans going away.


[[Page S5881]]


  I have met people who are still paying off their student loans and 
they are on Social Security.
  Last year, Tammy Brown of Redding, CA, said the government has been 
taking $179 out of her Social Security disability check each month for 
the past 5 years. Brown, 52, became disabled in 1986 after being 
involved in a car accident. Unable to work, she fell behind on her 
student loan payments. She said the Social Security check is too small 
to cover her food and medical bills, so she quit taking prescription 
pain pills. She said, ``It's kind of hard to live on this amount of 
money.'' This is a woman on Social Security disability, and what are we 
doing in the bipartisan deal? We are laying on top of what we already 
make from student loans an additional $715 million.
  Joseph Luka of Portland, ME, started college as a pre-med student, 
but he switched to mechanical engineering because the thought of 
graduating with more than $100,000 in student loans after medical 
school was too daunting.
  I will return to some of the comments at the close of my time.
  We have to ask a few questions. Why are we piling another $715 
million of debt on the backs of our students--so we could stand here 
and say we did a bipartisan deal? And I know how hard it was. Yes, 
there are great improvements from where it started. I appreciate that, 
but we have a better deal. It is called Reed-Warren. It matches those 
low rates you see in the bipartisan deal for the first 3 years. It 
matches them, and then it keeps the rates down. I am going to show just 
how much money we save students in the Reed-Warren legislation because 
it keeps the rates down.
  Did students put two wars on a credit card? Is that why they have to 
be punished? Were students running the banks that placed huge bets on 
Wall Street, leading up to the crash? Did students create a drug 
benefit in the Medicare Program without paying for it? Did students 
create and sell toxic mortgages, swaps, and securities? Oh, no, they 
didn't do any of that, but apparently we are forcing students to pay 
for that by tacking another $715 million on their backs.
  I have to say, when it comes to the banks, oh, hundreds of billions 
of dollars, no problem; too big to fail. It is very hard to explain to 
people and to students. We say we love our children and we want them to 
succeed. And yes, we do, but we don't follow our words with actions 
because if we followed our words with actions, we would embrace the 
Reed-Warren solution. But the handwriting is clearly on the wall, and 
we are not going to have the votes to do that, so we are going to ask 
our students to continue to pay more and more.
  We ought to look at what past Presidents have said about the 
importance of education.
  I feel I must point out that Americans have always said that our 
values include valuing our students. So let's go back.
  George H.W. Bush:

       Think about every problem, every challenge, we face. The 
     solution to each starts with education.

  How right he was when he said that.
  Bill Clinton:

       When we make college more affordable, we make the American 
     Dream more achievable.

  How right he was to say that.
  George W. Bush:

       Our country must focus our education system on helping 
     workers learn the new skills of the 21st century so we can 
     increase the job base of this country.

  And Barack Obama:

       The jobs of the future are increasingly going to be those 
     with more than a high school degree. We all want Americans 
     getting those jobs in the future. So we are going to have to 
     make sure that they're getting the education they need.

  OK. So how about charging our students $715 million more? That really 
helps us do what these Presidents have called us to do, which is to 
value our children, to value education. Two Democrats, two Republicans. 
A clear message. And, believe me, that is hard to find on a lot of 
issues. Education is key. Our students are important. They need the 
education to get the jobs.

  I am going to show exactly what this bipartisan bill is going to 
cost. I already said it is $715 million over the course of time to the 
government. Let's look at how much more each family will have to pay 
under this so-called ``deal'' compared with the Reed-Warren substitute.
  First, let's take a look at the 10-year loan. Now, what we do on all 
these charts is we go out to the cap because we know the caps will all 
be reached. All one has to do is look to the experts. They have told us 
the caps will be reached. Take the 30-year average rate of the 10-year 
note, add on the surcharge, and, bingo, the caps will be reached in a 
few years.
  Let's look at the Reed amendment versus the deal. If you have a 
$15,000 loan for 10 years, under the deal you pay $1,363 more than you 
would under the Reed amendment. If you have a $25,000 loan, over 10 
years you pay $2,271 more under the bipartisan deal. If you have a 
$50,000 loan--and you can get those, by the way--for 10 years, you pay 
$4,500 more.
  So let's say you decided you wanted to take 25 years to pay back that 
undergraduate loan. Let's say you have decided you want to take 25 
years. You will pay, for a $30,000 loan amount, $8,400 more under this 
so-called bipartisan deal than you would under the Reed-Warren 
amendment. You will pay $14,000 more over the course of a 25-year loan 
if you have a $50,000 loan amount.
  So I am saying to the American people who might be watching this, the 
bad deal is the bipartisan deal and the good deal is the Reed deal. 
Look at how much more money an individual has to pay for a $50,000 loan 
over 25 years--$14,000 more. Some people don't even make $14,000 in 
half a year.
  Let's look at what happens to graduate students, and this is why the 
graduate students are speaking out against this. Look at this: If you 
pay back your graduate loan in 10 years--and we all know the caps are 
going to be reached--you pay $2,500 more for a $15,000 loan, $4,200 
more for a $25,000 loan, $8,500 more with a $50,000 loan, and for a 
$100,000 loan you pay $17,000 more under the so-called bipartisan deal 
compared to the Reed amendment.
  So what we are seeing now is a breakdown of why we say it is going to 
mean $715 million more in debt on the backs of our students. I am 
showing how it breaks down for a family.
  This is worth looking at. If you are a graduate student--and I know 
the Presiding Officer probably has a doctorate--and you had to go 
borrow money under this bipartisan deal, if your loan amount was 
$30,000, you would pay $16,000 more than you would under the Reed-
Warren amendment. If you had a $50,000 loan, you would pay $26,000.
  Look at this: If you have a $100,000 loan, which many people have--
you hear about what the cost is, and many people who go to graduate 
school have this--you will pay $53,000 more under the so-called 
bipartisan deal.
  Let's take a look at the parents--the parents who will have the 
misfortune of having to live under this. Look at the cap. Under the 
Reed-Warren cap it is a 7.9-percent cap for the parent loan. Under the 
so-called bipartisan deal it is a 10.5-percent cap. So what does this 
mean? The additional money for a 10-year loan would be $2,500 for a 
$15,000 loan, $4,200 for a $25,000 loan, $8,400 for a $50,000 loan, and 
$16,000 for a $100,000 loan. That is how much more the parents of the 
students would pay.
  The last chart, to bring it home to everyone, is the parents who are 
going to live with this bipartisan deal unless we pass Reed-Warren are 
going to have to pay, over 25 years--because their cap is 10.5 percent 
under this great bipartisan deal--$16,000 more on a $30,000 loan, 
$26,000 more on a $50,000 loan, and--hold on to your pocketbook--
$53,000 more on a $100,000 loan.
  Why would we not support the Reed-Warren bill? Did it cost us a few 
bucks? Yes. So we paid for the few bucks it cost us by putting in a 
millionaire's surtax of \1/2\ percent. OK? But because the bipartisan 
deal expects students to pay, and is putting the deficit burden on the 
students, their cap ranges up to over 10 percent for the parent loans.
  So you might hear: Oh, Senator Boxer, it will never reach the cap. We 
will not get to the cap. Well, I will use a--well, I will not go there. 
That is simply not true. We will get to the cap. Why? I said before, 
the average for the 10-year Treasury bond over the past 30 years is 
6.22 percent. That is what it is. The bipartisan deal plugs us into the 
10-year Treasury bond and adds a few dollars, a few percentage points 
for

[[Page S5882]]

handling fees, and we will get all the way up to the cap in every case. 
It is just going to happen.
  If you don't learn from past interest rates, you can't predict the 
future. CBO predicts the future. They are using the past. We have to 
use the past. The cap will be hit. The cap will be hit.
  So where does this leave us? We have a stark choice to make. We can 
go with a bipartisan deal that people worked very hard on--and I 
compliment them for all the work they put into it, believe me. We can 
go with that deal that puts debt on the backs of our students--an 
additional $715 million worth of debt--or we can go with the Reed-
Warren alternative that says to students: You are already paying 
enough. We are not going to lay this on you. We figured out a way to do 
it so that you are capped at a much lower rate.
  This is what we are talking about. This is what we are talking about. 
The deal will take $715 million out of our students' pockets over the 
next 10 years, and anyone who thinks that is fair should vote for the 
deal. Anyone who can look into the eyes of a student who is already 
struggling, who is already working, who is already asking their parents 
for help and trying to put it all together in a package, anyone who 
thinks that is fair, then vote for the deal. But don't kid yourself. 
This $715 million is going right onto the backs of our families. I have 
shown the charts. This is a permanent deal.
  Senator Coburn: I am pleased Senators agreed on a permanent 
principled solution. On Friday, the Republican leader called this bill 
a permanent reform that ties interest rates to market rates. From the 
Republican HELP Committee, Senator Alexander called this a long-term 
market-based solution. They are not going to revisit this issue.

  I have to compliment Senators Reed and Warren. They deserve praise 
because they have come up with a plan that works, that is fair, and 
that will give solace to our students. For the undergraduate and 
graduate loans, we will see them capped out at 6.8, and for the parent 
loans the cap is 7.9 compared to over 10 percent in the so-called 
bipartisan deal.
  Now, I promised I was going to revisit some of the stories, and I am 
going to close with those stories.
  Sandy Barnett, 58 years old, of Illinois took out a $21,000 loan to 
pay for graduate school in the late 1980s. But even after earning her 
master's degree, Barnett struggled to find a job that paid more than 
$25,000 a year. She fell behind on her payments. She suffered through a 
layoff, a stretch of unemployment, and the death of her husband while 
her student loan ballooned to $54,000.
  So what are we saying to Sandy Barnett? Oh, great news, we had a 
bipartisan breakthrough and now we are going to add $715 million to 
student debt.
  When Michelle Bisutti, a 41-year-old family practitioner in Columbus, 
OH, finished medical school in 2003, her student loan debt amounted to 
$250,000. By 2010 it had ballooned to $555,000. The entire balance of 
her Federal loans--over $200,000--will be paid off over 351 months, 
when she will be 70 years old.
  What are we doing? Who are we fighting for? How can we make one more 
speech on the floor of the Senate saying our students are our future? 
We have an immigration bill that is letting in high-tech workers 
because we don't have enough trained American workers to fill the jobs. 
Yet we are going to make it easier on students by piling on another 
$715 million of debt on their backs and on the backs of their families?
  Emmanuel Tellez's mother is a laid-off factory worker, and $120 from 
her $300 unemployment check is garnished to pay the Federal PLUS 
student loan she took out for her son.
  Aren't we proud, Federal Government? This is great. We are garnishing 
Emanuel Tellez's mother, her unemployment check, because she took out a 
Federal PLUS student loan for her son. Why don't we talk about 
refinancing these loans? Why don't we talk about making it easier for 
people to pay back these loans instead of having a so-called bipartisan 
deal that adds $715 million to students; that puts it on their backs?
  Deanne Loonin, a staff attorney at the National Consumer Law Center 
in Boston, said she has been working with an 83-year-old veteran--Mr. 
President, an 83-year-old veteran--whose Social Security benefits have 
been reduced for the past 5 years.
  The client fell behind on a Federal loan that he signed up for in the 
1990s to help his son with tuition costs. Loonin said the government's 
cuts have left the client without enough cash to pay for medicine for 
his heart problems.
  This is a national problem, and part of it is a national disgrace. So 
what is the solution? A so-called deal that makes it worse.
  Last year, the Federal Reserve Bank of New York reported that 
Americans 60 and older still owe $36 billion in student loans. Social 
Security checks are being garnished and debt collectors are harassing 
borrowers in their eighties over decades-old student loans. We can't do 
this.
  There was a recession, the worst one since the Great Depression. Yes, 
people lost their jobs. Yes, people had problems. So why aren't we 
dealing with the underlying issues and making it easier for our 
families, instead of having a deal that is cut--I wasn't part of it, 
that is for sure--that hurts our students and their families.
  Mr. President, I yield the floor.
  The PRESIDING OFFICER (Mr. Coons). The Senator from Oregon.


                Remembering Officers Chestnut and Gibson

  Mr. MERKLEY. Mr. President, in approximately 8 minutes from now we 
are going to have a moment of silence for Officer Jacob Chestnut and 
Detective John Gibson in recognition of the sacrifice they made in 
defending the Capitol against an armed intruder.
  I want to say how much we appreciate the forces deployed to protect 
us in our ability to share our thoughts on a host of issues that we 
speak to on the floor. If somewhere across America someone violently 
disagrees with us, if they decide they want to not engage in democracy 
but engage in violence, they might come to the Capitol, and our 
wonderful force protects us and gives us the ability to speak our 
hearts and minds on this floor on behalf of our constituents every 
single day.
  So not only are we paying respect today to the officer and detective, 
but we are also paying respect to the entire delegation of security 
forces who work at the Capitol.
  I am going to be brief in order to pause appropriately for that 
moment of silence and tell you that the conversation we are having 
today is part of a broader conversation about how to build the middle 
class in America.
  There are some core pathways to the middle class, and one of those is 
fair mortgages. Indeed, when we were having a debate on Dodd-Frank in 
2009 and 2010, we decided to put an end to payments in which mortgage 
originators were steering people from fair loans into predatory loans 
and getting big bonuses for doing so.
  Today, the Director of the Consumer Financial Protection Bureau 
announced that they are bringing a case against a company that was 
doing exactly this, paying $6,000 to $8,000 per mortgage to an 
originator so they would betray their customer and not put them in the 
best mortgage they qualified for but into a much higher interest 
mortgage.
  I am delighted that in this Chamber we decided to end such practices. 
I am delighted we proceeded to confirm the first Senate-confirmed 
Director just last week so that this agency can do its job. Its 
announcement today shows it is hard at work in this critical area of 
fair home mortgages.
  Another key pathway to the middle class is living-wage jobs. We are 
going to have a lot of debate about what creates and destroys those 
jobs in America because there is no program that substitutes in terms 
of a foundation for a family more than a living-wage job.
  Another key pathway is education. Now, this is very personal to me. I 
grew up in a working-class community. My dad was a mechanic. I still 
live in that same community today, and I am surrounded by families that 
are struggling with near minimum wage jobs with often no benefits, 
hoping and praying that their children will be able to get the 
education necessary to have one of those remaining living-wage jobs. 
They are hoping we will do our job in Congress to help steer the 
economics of this Nation so there will be more of those living-wage 
jobs. But the viewpoint from the street is it doesn't look as though 
there are going to be a

[[Page S5883]]

lot of jobs for those folks graduating from college.
  They are also concerned if they send their child to college and their 
son or daughter ends up with a school loan the size of a mortgage, that 
is going to hang like a millstone around their neck and haunt them the 
rest of their life.
  My colleague from California has just spoken eloquently to this 
issue. She has just been sharing stories of people on the ground and 
what they are facing in the context of how these big massive loans for 
school are weighting down the opportunities for our children.
  In addition, it is discouraging our children from believing that they 
can even get that education. If they don't believe that, then they 
don't put in the work in high school to prepare themselves to get that 
higher education to fulfill their potential.
  I grew up from a small child with President Kennedy speaking of a 
vision in which we could aspire to great things, of fulfilling the 
maximum opportunity for ourselves and for our families and for our 
Nation. But right now, on the ground there is an undercurrent of deep 
discouragement, almost desperation, not seeing a broad boulevard into 
the middle class but seeing a cooked, broken path complete with tricks 
and traps. That is what this conversation is about: How do we create 
that broad path into the middle class?
  I am going to stop here, and I will come back later and talk 
specifically about the loan program.
  Mr. President, I yield the floor.


                           Moment of Silence

  The PRESIDING OFFICER. Under the previous order, the Senate will now 
observe a moment of silence in memory of Officer Jacob J. Chestnut and 
Detective John M. Gibson of the United States Capitol Police.
  (Moment of silence.)
  The PRESIDING OFFICER. The Senator from Oregon.
  Mr. MERKLEY. Mr. President, on behalf of so many of my colleagues, I 
want to thank the security forces at the Capitol for the incredible job 
they do in protecting these rooms where debates and democracy take 
place.
  The debate that we are engaged in right now is about how to create a 
broad path to access education, as education is one of the key factors 
in developing and realizing the dream of middle-class jobs in America.
  I was starting to share that this is very personal to me because I 
come from a working-class family. My parents and my grandparents had 
not gone to college. I didn't know people on my street who had gone to 
college. I didn't have siblings who had gone to college. I didn't know 
anything about college. But it was a scholarship, a loan, and jobs that 
enabled me to attend a university and pursue an education that took me 
into this realm of public policy, the realm that we are still in right 
now.
  My first deep interest was Third World economic development, and I 
was blessed with a chance to work in Central America and India and to 
live as an exchange student in West Africa. Then that same education 
gave me a chance to go to graduate school, and there I was able to 
prepare for working here on strategic nuclear policy.
  Education took me into realms that matter to our Nation, to our 
world, and matter in terms of creating the foundation to be able to 
have a living wage. So this is critically important to our children.
  The proposal we have before us is that we are going to set up a loan 
program, and the loan program is going to take the cost of funds that 
are lent out and put on an additional 2.05-percent cap or add-on in 
interest for those who are getting undergraduate loans. For those who 
are getting graduate loans, it is going to add a 3.6-percent spread, as 
it is called. And for parents who are getting loans to help finance 
their kids' education, it is going to add on a 4.6-percent spread.
  This 2-percent spread on undergraduates, 3.6-percent spread on 
graduates, and 4.6-percent spread on parents produces a lot of profits. 
I had my team consult with CBO to make sure the net profits of this 
program over the next 10 years are going to be $185 billion, and make 
sure we understand that they are taking the profits that come from 
those spreads, the higher interest charged over the cost of money, and 
they are subtracting out the fact that some loans will be defaulted on. 
They are subtracting out the cost of administering the program, and 
they end up with a net profit. How much is that net profit? It is $185 
billion.
  That means we are providing a service to our students, not at cost, 
but we are building in an equivalent of a massive $185 billion fee on 
the children of working families who are aspiring to get an education. 
That is not a great deal. In fact, it is a terrible framework.
  My colleagues who have worked to put this together point out that 
right now this may be the only option compared to locking in the 6.8 
percent for the next 10 years. In the first few years it produces a 
lower interest for our undergraduates than they would otherwise get. 
That is an important point to observe, that for a couple of years the 
loans our students will be getting will be at a significantly lower 
rate under the deal that is being proposed today. But over the course 
of the 10 years, the best estimate from CBO of the profits generated is 
still $185 billion, in fact $1 billion more, rounding off, than it is 
under the existing program.
  To those who believe this is a great long-term solution, I disagree. 
Is it better in the next couple of years? Yes, it is. But I ask you, 
exactly why do we believe that adding on $185 billion in fees as a 
profit center for the U.S. Government is a great idea if our goal is to 
create an affordable pathway to higher education? I have yet to have 
anyone explain that. In fact, I often hear: Well, you know, built into 
the existing law, which doubles to 6.8 from the 3.4 percent right now--
that has profits built into that too.
  That is a fair point. But let's step back and ask ourselves, 
sustaining the situation when we are charging extravagant fees to 
generate extravagant profits and lock them in for 10 years, is that a 
good idea?
  There are a couple of proposals that would make this a much better 
program. One is to say, no, we are not going to have this big spread 
with a high cap of 8.25 percent on undergraduate loans and 9.5 percent 
on graduate loans and 10.5 on parent loans. But we are going to cap it 
at 6.8 percent. That makes a lot of sense. I applaud my colleague from 
Rhode Island who has come to the floor to speak for that proposal, and 
certainly I will be supporting that proposal.
  Senator Sanders has said: You know what. This is a pretty good 
solution for a 2-year period, so let's sunset this after 2 years so we 
can have this debate again. Because if we lock this in for 10 years and 
if we maintain the pay-for rules of the Senate in which if you 
eliminate the profit margin in one area you have to increase the profit 
margin in another, we might never be able to unlock this and we will 
continue treating college loans as a profit center for the U.S. 
Government, so let's terminate this after 2 years. Let's sunset this 
and rethink this.
  That is a pretty good idea too. I encourage my colleagues to consider 
doing that. I certainly will be supporting that.
  Nick writes to me from Oregon. He says:

       After receiving paperwork the other day from DoE servicer 
     ``Direct Loans,'' I dove into my student loan [application] 
     to see what I was filling out an application for.
       I took out $5,500 my Freshman year of college, $6,500 my 
     second year, $7,500 in my third, and $7,500 to finish my 
     senior year. So in total I borrowed $27,000.
       In January I deferred payment on my loan because I had not 
     found full time employment.
       With a stroke of luck, in February I landed two part-time 
     jobs making a whopping $12 per hour doing manual labor to 
     supplement my $10 per hour part time gig in the health care 
     field.
       Since March I've been full-time with the healthcare 
     company, and earned a $1 raise. I've gained a lot of 
     experience on the job, but from a monetary perspective, I 
     wish I could be earning more so I could pay off my loans.
       My loans are currently at 6.8 percent with a total owed as 
     of today: $32,266.

  That is up from the $27,000 he had owed before. He continues, saying:

       At 6.8 percent my loans are accruing over $1,800 in 
     interest each year. That's about $150 per month.

  That is just the interest. Then when he is able to stop deferring and 
start making payments and include the capital being paid off it will be 
much more, and on a near minimum wage job that is extraordinarily 
difficult.
  Here is a letter from a mother in Oregon, Melissa.


[[Page S5884]]


       I graduated with a Master's degree in 1993. My loans have 
     been paid off for over 10 years.
       My husband enrolled in college when he was 36, 3 year ago. 
     He will graduate next year with over $60,000 in debt for a 
     Bachelor's degree.
       At this rate of increase in what it costs to get a college 
     degree, I don't see how it is possible for our son, who is 
     now 2, to ever have a college experience.
       Please do the right thing and help make education 
     accessible to everyone.

  That is the plea of Melissa, to do the right thing. The right thing 
would be to cap the interest in this program so it doesn't go over 6.8 
percent. The right thing to do would be to sunset this program after 2 
years. Both of those amendments will be available to all of us here on 
the floor. I encourage my colleagues to support those amendments.
  Our students already face $1 trillion in debt. It is weighing them 
down. It means they are postponing getting married, they are postponing 
having children, they are perhaps postponing moving out on their own 
because they cannot afford an apartment with this debt. It is hurting 
the economy and it is hurting our future because children are 
discouraged about the possibility of going to college.
  That is not the vision we want to have for America, where our 
children do not believe there is a path to the American dream for them. 
Today, if these amendments fail, it will be a very difficult choice, a 
very difficult choice between a couple of years of interest that is 
better than the status quo but a program that locks in a profit center 
for college loans, and we will have a very uncertain prospect about 
whether we can unlock that program a couple of years from now. I hope 
we pass those amendments.
  I am not sure, frankly, which side I will come out on if we fail in 
that effort. But I will tell you this. If this deal becomes law we must 
return to this floor time and time again because adding $185 billion in 
fees so we can have a profit off working-class students trying to find 
a pathway to the middle class is wrong and deeply damaging to the 
American dream.
  I yield the floor.
 Mrs. McCASKILL. Mr. President, on Wednesday, the Senate will 
take votes in relation to the Manchin amendment in the nature of a 
substitute to H.R. 1911, the Smarter Solutions for Students Act. I was 
unable to be present for this vote, due to a pre-scheduled commitment 
in my home State for which my attendance was confirmed before the 
timing of these votes was set. Because my presence would not have 
changed the outcome of either vote, I honored my previous commitment. 
Had I been present I would have voted in support of Senator Manchin's 
amendment.
  We are facing a crisis. On July 1, interest rates on new subsidized 
Stafford student loans doubled, from 3.4 to 6.8 percent. Already, 
officials at the Federal Reserve, the Department of the Treasury, and 
the Consumer Financial Protection Bureau have all warned that student 
borrowing threatens to dampen consumption, depress the economy, limit 
credit creation, and pose a threat to our Nation's financial stability. 
Students and graduates in my State are already heavily in student loan 
debt. Two out of every three Missouri students will leave college with 
student loan debt. At a time when a higher education is vital to 
expanded opportunity for so many young people and with a 21st Century 
economy that increasingly demands workers with the skills earned as 
part of a college education, we cannot make it even more difficult for 
young people to financially achieve a college education. We need to 
act.
  While not perfect, the Manchin amendment is the product of bipartisan 
compromise, forged and supported by Members from both sides of the 
aisle. I am proud to be a cosponsor of this legislation because it will 
provide relief to our Nation's students by lowering interest rates for 
America's student loan borrowers. This relief will not only apply to 
subsidized Stafford loans; it will apply to loans to undergraduates, 
graduate students, and the parents of students seeking to pay for their 
education. Importantly, this legislation also includes interest rate 
caps; without this feature, I would not have been able to support this 
bill.
  I would have also supported the second-degree amendment put forth by 
Senators Reed and Warren because it is consistent with my commitment to 
keeping rates low. The Reed-Warren amendment would provide certainty to 
students and families by ensuring that interest rates will go no higher 
than they would under the fixed rates in current law without adding to 
our deficit. I believe this is a responsible measure that deserves 
bipartisan support.
  To be clear, addressing the issue of student loan interest rates is 
only one piece of the puzzle of ensuring that higher education is 
affordable and attainable to those who seek it. We must also examine 
the issues of the rising costs of college attendance and the rapid 
growth of the proprietary college sector, where the share of Federal 
student aid payments and loan defaults is disproportionately and 
alarmingly high.
  I will continue to work with my colleagues on all of these issues. 
Congress has an important role in helping American students attain the 
higher education opportunities they seek, to ensure that our Nation 
remain a global leader in the 21st century economy.
  Ms. HIRONO. Mr. President, I appreciate the hard work of my 
colleagues who reached today's compromise student loan plan. However, I 
will oppose this bill, and I want to explain my reasoning.
  The bill before us may be a good deal for current students in the 
short term, but it hurts their younger brothers and sisters in just a 
few years.
  We must find a way to make college affordable for students and 
families--not just for those who are attending college in the fall or 
over the next few years, but also for those who will attend college in 
the future.
  In Hawaii in the 2013-2014 academic year, the U.S. Department of 
Education predicts that over 20,000 undergraduate students, over 3,300 
graduate students, and over 2,300 parent borrowers will take out 
Federal student loans.
  Today's bill changes Federal student loans to variable interest 
rates, and raises caps above current law. While this bill will keep 
student loan interest rates low in 2013, the Congressional Budget 
Office--CBO--projects that by 2017, the rates for undergraduate student 
loans will rise above current law.
  The American Association of State Colleges and Universities--AASCU--
American Association of University Women--AAUW; Education Trust, The 
Institute for College Access and Success--TICAS; United States Public 
Interest Research Group, Young Invincibles, and other groups oppose 
this bill.
  Under today's bill, undergraduates would see their student loan 
interest rate caps increase from 6.8 percent today to the higher cap of 
7.25 percent by 2018. Graduate students would see their rate caps 
increase from 6.8 percent in 2013 to a new, higher cap of 9.5 percent. 
Parents using Federal PLUS loans would see their rates increase from 
7.9 percent in 2012 to a new, higher cap of 10.5 percent. At these 
levels, future students will pay thousands of dollars more over the 
life of their loans.
  I am a cosponsor of two of my colleagues' amendments that would 
improve this bill. To avoid hurting future students, I support an 
amendment by Senators Jack Reed and Elizabeth Warren that would allow 
students to take advantage of the benefits of today's short-term low 
interest rates, but would keep the same cap as current law. This 
amendment is fully offset by a surcharge on millionaires. I also 
support Senator Sanders' amendment to sunset today's bill in 2 years to 
prevent interest rates from exceeding current law and to foster a 
better long-term solution to college affordability.
  Government should not be making money on the backs of students. Under 
current law, the Federal government already overcharges students for 
their student loans, to the tune of over $180 billion over the next 10 
years. This bill locks in that profit, plus it brings an extra $715 
million to the Treasury. It is encouraging that today's bill requires 
the Government Accountability Office to study the actual cost of the 
Federal Student Loan Program. However, only after getting this 
information can Congress make an informed decision to set student loan 
interest rates with just enough markup to make the program self 
sufficient. Without knowing the true costs of the student loan program,

[[Page S5885]]

it is premature to lock in the arbitrary rates in today's bill for 19 
years.
  Instead, a few weeks ago I voted for both S. 953, the Student Loan 
Affordability Act, and S. 1238, the Keep Student Loans Affordable Act. 
Each of these would provide a temporary extension of a 3.4 percent 
interest rate on subsidized Stafford loans, completely paid for by 
closing tax loopholes. Such an extension would give Congress time to 
work toward a broader reauthorization of the Higher Education Act that 
can address many other important aspects of college affordability and 
completion all at once, beyond just this interest rate debate.
  In sum, I do not support today's bill because it makes future 
students worse off than current law. Instead, I look forward to working 
on other initiatives to improve college accessibility and affordability 
for our young people.


                 bipartisan student loan certainty act

  Mr. LEAHY. Mr. President, more than 3 weeks have passed since 
interest rates on subsidized Stafford loans have doubled for students 
next year. Unfortunately, this rate increase has taken effect despite 
numerous attempts by the Senate to extend the lower rates while we 
debate a comprehensive solution to the high cost of college, including 
student loan interest rates. Few if any bills that make their arduous 
way through the legislative process are perfect, but the legislation we 
are considering today is, in too many ways, too imperfect. Even after 
our attempts to win approval of better options, this legislation, in 
its final form, does not offer enough to protect our future students 
from needlessly paying higher interest rates.
  Education is a path out of poverty, a road to personal growth, and an 
access ramp to professional accomplishment and economic security. No 
student should be denied the benefits of a college education because of 
the cost, but unfortunately that is happening all too often. In recent 
years, average college tuition rates have been increasing faster than 
inflation and outpacing student financial aid. Tuition rates today are 
going beyond the ability of most families to pay. As a result, students 
and their parents take on significant student loan debt in order to 
have the opportunity at a college education.
  I believe that the Federal Government has an obligation to support 
these students by subsidizing loans for the lowest income students and 
offering programs like Pell Grants to help students who never thought 
they could afford college. While the bill lowers interest rates for 11 
million students in the near term, students and their parents by as 
soon as 2015 will likely pay higher interest than they pay under 
current law. Debt from student loans is climbing to new heights and 
outstanding student loan debt in the United States has reached nearly 
$1 trillion.
  This debate has included consideration of two amendments that I am 
pleased to cosponsor that would greatly improve the underlying 
legislation. Senators Reed and Warren filed an amendment to reduce the 
caps on interest rates to current levels, ensuring that students are no 
worse off under this legislation than they are today. We also have 
considered an amendment by Senator Sanders, which will sunset this 
agreement after 2 years, ensuring that Congress continues the important 
conversation at how best to reduce college costs for students and their 
families. I very much hoped that these amendments could have been 
adopted.
  This legislation is a mere patch on a much larger problem. We must 
have a comprehensive debate at lowering college costs through the 
Higher Education Act reauthorization this fall. As part of that debate 
I dearly hope we address the abuses of for-profit colleges and the raw 
deal they are giving to far too many students. While these schools are 
turning a profit and filling the airwaves with paid advertising, many 
of their students are defaulting on their federal loans because these 
schools by and large do not offer an adequate education that prepares 
students for the working world. Some of these schools are swindling our 
students, and we cannot adequately address college affordability 
without better regulating for-profit schools.
  This legislation is not what I would have drafted. Under the new 
student loan bill, the Federal Government will make an additional $715 
million in profits over the next decade, and all of the profit is 
coming from the pocketbooks of students and their families. While I am 
pleased the legislation includes a GAO study within 4 months to help us 
better understand the costs to the government of running the student 
loan program, so that we can better set appropriate student loan 
interest rates that do not generate revenue for the Federal Government, 
it does not go far enough to protect our students.
  This conversation is not completed. The challenge and the obligation 
of making college affordable certainly remains. We have a 
responsibility to families across America to not only keep student loan 
interest rates low in the years ahead, as they plan their finances and 
manage their households, but to make fundamental reforms to help 
students and their families manage college costs. I am counting on that 
debate, and I know America's students are, too.
  The PRESIDING OFFICER. The Senator from Rhode Island.
  Mr. REED. I ask unanimous consent at the conclusion of Senator 
Carper's remarks I be recognized to use the time allotted to me under 
the motion.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The Senator from Delaware.
  Mr. CARPER. Mr. President, I think what I would like to do is try to 
set this discussion this afternoon in context if I can. One of the 
things I focus on a lot--I know the Presiding Officer does as well back 
in Delaware--is how do we create a nurturing environment for job 
creation and job preservation. I think that is one of the most 
important aspects of government. That is not the only one. One of the 
best things you can do to help people is make sure they have a job.
  One of the ways to strengthen our economy is to make sure we are 
making smart investments with Federal, State, and local moneys as well 
as public funds. One of the ways we create that nurturing environment 
is to make sure we have a world-class workforce; that folks coming out 
of our high schools can read, write, think, do math, have science 
skills, technology skills, a good work ethic.
  Other parts of the nurturing environment include access to capital; 
that is, to money, commonsense regulations, some certainty with respect 
to the Tax Code--a Tax Code that makes sense, is not burdensome--access 
to elected officials, modern infrastructure, broadly defined. Those are 
some of the elements.
  But if we are going to be successful as a country in this century, we 
need to invest, among other places, in a world-class workforce, those 
kinds of skill sets. That is not just college, not just in 
postsecondary, it is almost from the cradle well into their lives.
  A second area where it is important for us to invest is 
infrastructure, broadly defined: roads, highways, bridges, rail, ports, 
airports, water, wastewater, broadband deployed all across the 
country--those are the kinds of investments that will pay great 
dividends in the form of a stronger economy.
  A third area we need to invest in is research and development. We 
were reminded by Dr. Francis Collins, head of the National Institutes 
of Health, of the kind of impact sequestration is having on our 
abilities to invest in all kinds of health-related areas and 
pharmaceutical areas, medical areas. They are finding it difficult to 
make the kind of investments needed to be made. Part of what we need to 
do is invest in the kind of research that can be commercialized and 
turned into goods and products we can sell not just in America but all 
over the world.
  That is sort of the context. In my view, in the end this is how we 
strengthen our economy, how do we grow the economic pie for our country 
and citizens.
  Going back to the first item I mentioned is a world-class workforce. 
It doesn't start when people graduate from high school and go off to 
college, whether junior college or whether it is a certificate program. 
It is what we do before they ever go the to first grade, the kinds of 
investments that are made before kids ever go into kindergarten, at the 
age of 5 in most States.
  But today's debate is on college loans. I will focus on that. Let me 
remind us, the investments we do not make in the lives of children when 
they

[[Page S5886]]

are young, before they ever go to kindergarten, can be demonstrated in 
Head Start. We only fund about half the kids in this country who are 
eligible for Head Start, only half. We fund roughly half the kids who 
are eligible for what is called title I, special education programs in 
our schools to make sure that, if they are way behind, they have a 
chance to at least catch up a little bit. We fund half the kids 
eligible.
  Some of my colleagues said we should provide free college education 
for people; that should be our policy. We are not even meeting our 
obligation to fund Head Start for half the kids in the country, fund 
special education title I for half the kids in the country who are 
eligible. We have a $750 billion budget deficit this year. It is down 
from $1.4 trillion a couple of years ago, but it is large. It is going 
to come down for a while and then jump back up a number of years down 
the line.
  I think for us the question is how do we get a better result for less 
money in almost everything we do. In a way college loans are the 
symptom of the problem but not the underlying problem. The underlying 
problem is less the Federal student loan program, it is more the cost 
of education, what we are spending. My wife and I put two boys through 
college in the last half dozen or so years and we have a pretty good 
idea of what it costs to go to school these days. They got a good 
education but, boy, it costs a whole lot. One of the things we need to 
be focused on when we have this debate is what can we do to make sure 
our young people get a good education but how do we make sure it is 
done in a cost-effective way.
  There is some interesting work going on in places such as MIT, 
Harvard, Stanford, that I think is informing us all in that discussion.
  Let's talk about the program before us today, the student loan 
program. For a number of years we set the rate cap at 6.8 percent and 
then during the great recession we lowered that cap so the top rate 
students would pay on their student loans, Federal student loans, was 
3.4 percent. That period of time expired more than a year ago, June 30 
of last year, and so the rate was supposed to pop back up to 6.8 
percent where it had been previously as a cap on what could be charged 
to students.
  June 30 a year ago we were not sure what to do and we said let's kick 
the can down the road and put it off a year, the date of decision, and 
we will decide by June 30, 2013, what the new policy should be. We got 
here on June 30, 2013, and some were willing to kick the can down the 
road for another year and deal with it then.
  The President said we cannot do that. We can't keep doing that. The 
President said we need to put in place a policy, a commonsense policy 
that is fiscally responsible but also that is morally responsible to 
the least of these in our society. I think we have both a fiscal 
imperative here, given the large deficits we face, and we have a moral 
imperative here to make sure the least of those in our society have a 
chance to have the ability to go to college and get a college 
education--be more productive in our society.
  A lot is being said about the different rates.
  There are two numbers we ought to keep in mind. People have said that 
in years to come interest rates will go up. I suspect they probably 
will go up since they are pretty low at this time, but we don't know. 
We have had Senators come to the floor and say the interest rates will 
be this amount or that amount. Who knows. We don't know.
  What we do know is that under the current law right now and unless we 
pass something and get bipartisan support as well as the support of the 
President, the interest rate is going to be 6.8 percent for some time. 
If we adopt the bipartisan proposal that a number of us are offering--
it is a tripartisan proposal, actually, with the support of the 
President--the rate for the student loans this year will not be 6.8 
percent, it will be 3.86 percent.
  If the student takes a loan this year, that rate doesn't go up. Even 
if interest rates go up, they will owe 3.86 percent on the loan that 
students take out this year. If they take out another loan in the 
following school year and the rate is 4.1 percent, or whatever that 
rate is, that is what they will pay on that second loan for the balance 
of the loan, whether it is 5 years, 10 years, 15 years, or 20 years.
  As interest accrues on these student loans over the next 2, 3, and 4 
years while someone is in school, a reasonable question to ask is: Who 
pays for the accrued interest? If the student is in school, as most of 
us have been, the interest accrues. In the past, we have had subsidized 
loans for low-income students and unsubsidized loans for those who have 
a higher income. For a number of years, the student who had the 
subsidized loan--the lower income student--would accrue interest on 
their loan for year 1, year 2, year 3, year 4, and year 5.
  As for the subsidized student, the Federal Government has paid the 
accrued interest. Then when they graduate from school and walk away, 
they don't owe that interest. It has been paid for--forgiven, if you 
will.
  For the unsubsidized higher income student, the Federal Government 
defers the interest, but eventually interest--eventually it has to be 
paid by the higher income student. We don't change that. We leave that 
in effect.
  Who pays the accrued interest for the lower income students? The 
Federal Government. When they graduate school, then they have an 
obligation to pay that interest and the principal on their own.
  As I have talked to my colleagues, I find that not everybody knows 
what I just mentioned about the lower rate. As far as the example I 
just gave, if the rate for the student loan taken out this fall is 3.86 
percent and the next year the rate is 5 percent or 6 percent, the House 
let's the rate go up each year. A permanent, assigned rate would not be 
in effect when the loan is taken out.
  Somebody graduates and they go to work. In this example, they find a 
job that pays $25,000. That is one person who has no spouse or kids. 
Let's say that person has $45,000 worth of debt. How much can they be 
compelled to pay in interest starting the year after they graduate? The 
answer is not $1,000 a month or $500 a month. The answer is $97 a 
month, and that is it. There is a mathematical formula where we take 
their income, less what the poverty level is for that person, 
multiplied by 0.15 percent. In this case it is $97 a month.
  Then we have this example. Let's say Sally gets married, has a child, 
and has a family of three. Let's say the family of three is making 
$40,000 a year and they have $45,000 worth of loans. How much can they 
be compelled to pay in interest? Again, there are three people in the 
family with $45,000 in loans. How much can they be compelled to pay? It 
turns out to be about $120 a month. Not many people realize this is the 
law, and it is going to stay the law under the tripartisan proposal.
  How about if somebody goes to work for the Federal Government or 
State government or local government or they go to work for a nonprofit 
and they do so at some sacrifice. Maybe they could make more money in 
the private sector, but they have this urge or compulsion for public 
service. After 10 years, their loan will be forgiven. If they are 
current on their loan, their loan will be forgiven after 10 years of 
public service. That has been the law and that would remain the law.
  How about if they don't work in public service? What if they don't 
work for the State, local or Federal Government? What if they don't 
work for a nonprofit with a 501(c) designation? Let's say they are 
current on their loan. After 25 years, their loan is forgiven as well.
  We can argue about the rate we use to determine what graduates, 
undergraduates or families would pay on their loan after the student 
graduates and whether it makes sense to peg or key that rate off the 
10-year Treasury note. I think the 10-year Treasury the President has 
recommended is a reasonable place to begin.
  Some have said we should use the Fed funds rate. What is the Fed 
funds rate? That is the rate that is charged overnight when one bank 
loans money to another bank overnight. Some people say that should be 
the rate. This is not an overnight loan from one financial institution 
to another, so I don't think the Fed funds rate is appropriate.
  Some people said we should use a 90-day T-bill rate. This is not a 9-
day loan. A 90-day T-bill rate may make

[[Page S5887]]

sense for credit card interest rates, but a 5-year, 10-year, 15-year, 
25-year student loan, I don't know that a 90-day T-bill rate makes a 
lot of sense as the interest rate for us to use.
  Some people have said: Why don't we use a rate that might be charged 
for a 3- or 4-year car loan? This is not a car loan that is 
collateralized with a car. This is not a 20-, 25-, or 30-year mortgage 
that is collateralized with a house. This is a long-term loan that is 
not collateralized.
  What the President has said--and I and our bipartisan group agree--is 
that it makes sense to use a 10-year Treasury note and peg the rate off 
of that and add to that a modest fee--in this case close to 1.5 
points--to make sure the program is soundly run and doesn't make the 
deficit larger.
  We have heard about some large numbers assigned as to what this 
amounts to in terms of a transfer from students to the Federal 
Government. The President's original proposal had a very large amount, 
under his initial proposal, going from students to the Treasury, and he 
was going to use that money to pay for Pell grants. We would actually 
cover the cost of the Pell grant increases. We don't do that in our 
program.

  What we tried to do is to take the very large transfer of money in 
the President's proposal to the Treasury and to change that and scale 
that down and come as close as we could to eliminating it. This is 
about a $1.2 trillion college loan program, and that is about as close 
as we could come to eliminating the transfer, if you will, from 
students to the government to about $600 million to $700 million. That 
is a lot of money, but out of $1.2 trillion, somebody told me it works 
out to $2.50 per student who is getting a loan. If we can bring it down 
to zero from $600 million or $700 million, that would be great.
  Let me conclude with these thoughts: Should we have a Federal student 
loan program? I am sure some people think we shouldn't, but I think we 
should. Should it be one where we use the Government's purchasing power 
to make it possible for people to access credit so they can go to 
school? I think we should. Should we allow people to use the Federal 
money the Government borrows--should we let them have that money at 
below Government cost? When we do that, it makes the deficit go up and 
it makes us squeeze programs such as Head Start and the Title I 
Program. It is like robbing Peter to pay Paul.
  I think this is a good proposal. This proposal will use the 
Government's borrowing power and will be able to provide a lower-than-
market rate for a lot of students. Students will be able to lock in the 
lower rate. It will then provide some help--with the Federal Government 
paying for the accrued interest--for the lower income students who have 
the subsidized loans. During the time they are in school, the 
Government picks it up, and they don't have to pay it back. It is 
covered by the Government.
  This will make sure that when students graduate and get a job that 
doesn't pay a lot of money, there are significant limits on how much 
interest they can be compelled to pay in a year.
  If somebody goes to work for the Federal Government, State 
government, local government, nonprofit or public service, after 10 
years--if they are current on their loan--it is forgiven. For a person 
who doesn't go into public service but is current on their loan and 
still owes a ton of money after 25 years, their loan is forgiven. That 
is not heartless or unfair. I think it is pragmatic and reasonable. I 
think it makes sure we meet our fiscal obligation for the taxpayers. At 
the same time, we are meeting our moral obligation for those who need 
to borrow money to go to college.
  I think there was a UC request--as I was beginning to speak--from a 
Senator from a State smaller than Delaware. I believe he had a 
unanimous consent request to speak immediately following my remarks.
  I yield with great pleasure for my Army buddy, the Senator from Rhode 
Island, Jack Reed.
  The PRESIDING OFFICER (Mr. Brown). The senior Senator from Rhode 
Island is recognized.
  Mr. REED. Mr. President, I recognize it is a much larger State. The 
nice thing about the Senate is that we all have two Senators.
  There has been a great deal of work put together by so many people 
here: Senator Carper, Senator Manchin, Senator Alexander, Senator 
Harkin, Senator King, and Senator Burr. I could go on. They have been 
trying--in a principled way--to help students. They provided short-term 
help, but the major criticism I have of the legislation is that it 
locks us into the long-run, predictable rate increases and will add 
further to the burden that students and families are bearing to send 
their children, and themselves, to college and beyond.
  Despite these great efforts, I just do not believe this approach, if 
unamended, is going to be the way we want to move forward.
  Mark Kantrowitz is a well-known expert on student aid. His comments 
are particularly telling.

       It's still going to be, effectively, an interest rate 
     increase masquerading as a decrease. Students currently 
     enrolled will benefit from the low interest rates, but as the 
     economy recovers and rates rise, today's high school students 
     could end up paying more than 6.8 percent. It's far from a 
     permanent solution.

  I think he is right. I wish to emphasize the fact that as the economy 
recovers and rates rise, one of the fallacies of the CBO projections is 
that back in early 2000s they suggested that interest rates would stay 
very high. They did not anticipate the collapse in 2008 and 2009 of our 
economy.
  Honestly, I don't think we want to premise our student lending on an 
economic collapse. I think what we want to do is assume and hope that 
the economy recovers, which will invariably increase interest rates. We 
are starting at the low point of interest rates, and then inevitably we 
are moving up. We are moving up as the economy recovers. We will also 
move up as the Federal Reserve limits their very aggressive 
quantitative easing program, where they have been buying securities to 
depress the rates.
  If we look at the CBO projections, parents and graduate students will 
begin paying more than the current fixed rate of 6.8 percent and 7.9 
percent by 2015. That is not a long time. That means the young freshman 
who is going into college next year might benefit from this proposal, 
but the younger brother or sister who is a freshman in high school will 
be paying much more. I think collectively, over time, since this is a 
permanent proposal, the debts that will accumulate to American families 
and American students will be significant.

  We are essentially adopting a new approach to Federal policy on 
higher education. We are not subsidizing it; we are not making it below 
market rates. We are shifting the costs on to students. That is because 
one of the premises in this proposal, quite obviously, is that there 
will be no cost to the government, and we are starting with the 
principle of a rate of 6.8 percent over time. So as we decrease rates 
for the first few years, just simple arithmetic tells us we have to 
raise rates going forward.
  Also, I think the way this is structured has to be considered. We 
have chosen not a short-term T-bill rate--a 91-day rate--which is low; 
we have chosen a 10-year rate which, in itself, is higher. So we have 
begun our reconstruction of the rate structure by picking a much higher 
baseline than has been consistent in the past, even with variable 
rates, and we have had variable rates in the past. Then we have added a 
premium to that to cover our costs--the cost of default, the cost of 
the administration of the program.
  Interestingly enough, in this proposal, there is a study the GAO is 
ordered to do to tell us if our cost estimates are in any way close to 
the real cost to the Federal Government. I think the factor is 
significantly sufficient that the premium--the delta, if you will--we 
are charging students is much higher than the real cost, even including 
default rates, to the Federal Government.
  I think this is a proposal that, again, was generated with great 
sincerity and great diligence, but over time it does not meet the test 
of consistency with our previous support for higher education. We 
actually subsidized higher education, and we did it at below-market 
rates. We did it because we believed we had to give students a chance 
to educate themselves not only for

[[Page S5888]]

their benefit but, just as importantly, for the benefit of this Nation.
  I would suggest--and around this Chamber I have said this before--
directly or indirectly, every one of my colleagues who is of a certain 
age has benefited from subsidized student loans. If they didn't, then a 
brother or a sister or someone did. Yet we are saying that was good for 
us, but it is not good for this generation of students. They should 
bear the risk of interest rate increases.
  They should bear the full cost. This is at a time when we have to be 
much more cognizant of the centrality of higher education in terms of 
the lifetime wages and earnings of individuals and in terms of our 
economic competitiveness across the globe.
  We all have reached a point that unless we adopt the amendment I 
propose, we are locking ourselves into increasing rates that go way 
beyond the current statutory rate of 6.8 percent for Stafford loans and 
7.9 percent for PLUS loans. Even with these rates--the current rates--
6.8 and 7.9 percent--CBO has estimated that the government will 
generate about $184 million in revenues. That is the difference between 
the cost of funding and the return. It is just what it costs the 
government to borrow and what they are getting in revenue from 
students, accounting for defaults and borrower benefits. So instead of 
investing in students, we are basically profiting from them, and that 
point has been made by my colleagues, particularly Senator Warren, over 
time.
  As we move to this new form of rate structure--10-year Treasury bills 
plus a premium; they are capped, but they are capped at high rates--the 
government will, in fact, be making even more money.
  What I would like to do and what we have tried to do is to propose 
that we initially freeze rates at 3.4 percent and then spend the time 
to fix this problem as best we can completely. We need to develop a 
rate structure that does not provide a huge profit, as defined between 
the cost of funding and the revenue to the Federal Government, 
incentivize colleges to lower tuition--and that will be a very 
difficult and challenging endeavor--and think seriously about 
refinancing because right now we have students and families facing $1 
trillion in debt, and they are suffering under this situation.
  We want to take a comprehensive approach, but this is not the 
approach. This is simply fixing rates. The one certainty in this 
legislation is that the rates will go up--not right away, but they will 
go up--and they could go up very quickly, and they could reach the 
limits very quickly, and that is an additional burden on students. As a 
result, it will begin to make college more expensive, less affordable, 
less of an option for many families and youngsters, and it will hurt us 
in the long run in terms of our economic competitiveness and our 
ability to grow our economy.
  We have had experience with market-based rates in the student loan 
program before. This is not new. Most recently, the market-based rates 
for student loans from July 1, 1998, and June 30, 2006, was yield on a 
91-day Treasury bill plus 1.7 percent while the student was in school 
and plus 2.3 percent while the student was in repayment. This rate was 
capped at 8.25 percent, and it applied to all Stafford loans--
subsidized, unsubsidized, and graduate. For parent PLUS loans, the rate 
was the yield on the 91-day Treasury bill plus 3.1 percent, capped at 9 
percent.
  Those rates were a good deal for borrowers. Students who are repaying 
their loans under this system have a rate of 2.35 percent this year and 
parents are paying 3.15 percent. That is because interest rates have 
come down dramatically. One of the reasons for that--perhaps the 
primary reason--is because we faced an economic potential catastrophe 
in 2008 and 2009. Economic activity shrunk, rates fell, and the Federal 
Reserve took a very aggressive program of quantitative easing to 
deliberately lower interest rates.
  Instead of using the 91-day Treasury bill, what this underlying 
proposal uses is the 10-year Treasury bill. This decision results in a 
rate that in and of itself is 1.76 percentage points higher for this 
year alone. If we use the 91-day T-bill rate, we could lower rates even 
further, but we are using the 10-year rate, so we are already building 
in almost 2 percentage points of interest for students who will be 
subject to this legislation.
  Since May 1 we have already seen the rates on the 10-year Treasury 
bill climb nearly 1 percent. Those rates are headed upward, and the CBO 
has projected them to rise. That is consistent, by the way, with an 
economic recovery. So the good news is if the economy recovers, 
interest rates will rise except it is not good news for students 
because their interest payments will rise. If CBO is wrong, that means 
we will probably have an economic shock ahead of us which will be bad 
news for everyone.
  So I think we have to be very cognizant of the fact that there is a 
much better way to do this, and there should be a comprehensive 
approach.
  What we are suggesting, and in the amendment Senator Warren and I are 
proposing, is that we at least cap the interest rates for the Stafford 
loans--for the undergraduate loans--at 6.8 percent, which is the 
current rate, and for the PLUS loans at 7.9 percent so no one, 
regardless of whether one starts college next fall or 4 years from now, 
will be worse off than the current situation with the fixed interest 
rate. I think that would be an improvement. I think, if we don't adopt 
such an approach, then we are locking students and families into a very 
costly and predictably increasingly costly structure. We are not making 
any reforms with respect to the cost of college. We are not dealing 
with the issue of refinancing.
  Honestly, I also think to say, well, if it gets really bad, if we 
really start hitting those caps--to say we will go back and fix it 
fundamentally ignores one of the principles that underlies this 
proposed legislation--that there be no further costs to the government. 
To fix the interest rate several years from now, when it is 8 percent, 
again, will cost a lot more than staying with the current 6.8 percent 
fixed rate and 7.9 percent fixed rate.
  So for that reason, I will be opposing the underlying legislation 
unless we can make significant progress with respect to at least 
capping the rates at 6.8 percent and 7.9 percent.
  With that, I reserve the remainder of my time, and I yield the floor.
  The PRESIDING OFFICER. The Senator from Alabama.
  Mr. SESSIONS. Mr. President, I wish to speak for a few minutes about 
the loan program and concerns I have about it, particularly the scoring 
conventions used by the Congressional Budget Office in its cost 
analysis of these student loans. It is something I have looked at for 
some time as the ranking member of the Budget Committee. We have asked 
CBO to analyze these issues and have offered the honest Budget Act, 
which deals with all kinds of loans, and the improper way CBO scores 
them--not that they do it on their own, but because we require them to 
score it that way.
  In sum, I would say the loans that have been referred to today do not 
make money for the government. They just do not. They are going to cost 
money. It is simply--and that would be a subsidy to the borrower. We 
are talking about 2.05 percent above the 10-year Treasury note, and 
that is a good way to figure what the interest rates are. When they 
rise, the cost of money rises. It rises for the U.S. Treasury as well 
as for the people who borrow from the U.S. Treasury.
  But the Federal Credit Reform Act, or FCRA, requires CBO to score 
these loans in a way that gives the impression that they do, in fact, 
make money. In a recent report on student loans, the CBO wrote to us 
that FCRA--this is the law that tells them how they analyze the cost:

       FCRA accounting does not consider some costs borne by the 
     government. In particular, it omits risks taxpayers face 
     because federal receipts from interest and principal payments 
     on student loans tend to be low when economic and financial 
     conditions are poor and resources therefore are more 
     valuable. Fair-value accounting methods account for such 
     risk. . . .

  Fair value accounting methods aren't being used with these loans. In 
fact, CBO utilized a fair value accounting system--please get this, 
colleagues: They used that system to analyze these loans in addition to 
the system required by law, and that would show that student loans 
actually lose money for the American taxpayer. So often around here we 
have scores that indicate one thing, and Senators advocate that they 
say one thing, when the truth is it costs us money.

[[Page S5889]]

  As the Senate moves forward in this debate, it is important that it 
consider the real costs associated with the Federal student loan 
program.
  The budgetary costs of the Federal Direct Student Loan Program are 
determined based on accounting rules specified by the Federal Credit 
Reform Act. Under the guidelines set forth there, the cost of Federal 
loans are recorded in the year in which the loans are made. The net 
cost of a student loan includes the estimated future repayment of 
principal and interest--the estimate of what would be repaid. The value 
of these future repayments are adjusted to reflect certain risks--the 
risk of default and the risk of inflation. CBO cannot, however, include 
an adjustment for market risk, such as if the country has a bad 
financial crisis, which periodically happens.
  Examples of market risk include the current fiscal situation: Our 
Nation's current unemployment rate is 7.6 percent with 11.8 million 
people unemployed. Some want to continue to bring in millions of people 
to take those jobs from abroad while we have 11 million people 
unemployed, and it is time for us to reevaluate that policy, in my 
opinion.
  According to the Bureau of Labor Statistics, June 2013 figures, the 
unemployment rate among college students shows about 1.9 million 
unemployed college students. All of these factors lead to lower loan 
repayment rates and higher collection costs for the government. With an 
interest rate well over 7 percent and college students struggling to 
find work, default rates are going to increase.
  Because the FCRA method of accounting for student loans does not take 
into account all of the risks that are associated with making a loan, 
the government should require that CBO adopt the fair-value accounting 
method. As I said, unrelated specifically to this legislation, I 
offered legislation 2 years ago to do just that because the American 
people need to know what the cost to the Treasury will be when we make 
loans, and we know, and CBO acknowledges, that this method they are 
using required by law is not accurate.
  According to a June 2013 CBO report made for the Senate Budget 
Committee entitled ``Options to Change Interest Rates and Other Terms 
on Student Loans'' that I requested in my capacity as ranking member of 
the Budget Committee, CBO admitted and acknowledged that its current 
scoring rules failed to adequately account for the cost of these loans.
  That is just a fact. I wish it were not so. I wish we could cut these 
rates even lower than they are. But I have to say, it is not accurate 
to say the Federal Government is going to make a bunch of money off of 
it.
  It goes on to say:

       [U]sing fair-value methodology represents a broader measure 
     of cost that includes the cost of market risk.

  So CBO has explicitly stated it would be better to use the fair-value 
methodology and not the other.
  Well, does that make a difference? Does it change what the score and 
the analysis would be? They have their official analysis based on the 
requirements that Congress gave them, but they acknowledge the market 
risk is a better analysis. What did they say that would do?
  The methodological difference between FCRA--the current system--and 
the fair-value accounting system produces alarmingly different 
results--alarmingly different. Under the FCRA, CBO estimates that the 
student loan program will reduce the deficit by $37 billion in fiscal 
year 2013 and save $184 billion over 10 years. With those results, of 
course, the program looks good.
  But under the fair-value accounting procedure that CBO says is 
preferable, CBO estimates that direct student loans issued between 2013 
and 2023 would cost the government $95 billion--cost the government $95 
billion. Suddenly, the student loan program, when adjusted more 
accurately for market risk, is a deficit creator rather than an income 
producer.
  As I say, I wish that were not so. I hate to report that. But we have 
been looking at these numbers for some time. I urge my colleagues. I 
know we need to do something about student loans. We need to get it 
done now. I am not here to try to say we should not pass anything. But 
what I am saying is, colleagues, we have to end this fooling ourselves 
system. We have to go to an honest system that the private markets 
utilize and the Federal Government should be utilizing. I am going to 
continue to push for that.
  We will continue to work on this issue. I know we have a situation 
that is very painful for students, many of whom have overborrowed. They 
did not understand the significance of what they were doing and they 
ran up more debt than they should have. As a result, they are in a 
painful circumstance, for sure. But when we do our policy for the 
future, and we analyze what it costs to make a loan program--what it 
costs the taxpayers--we need to have accurate accounting.
  If the matter is accurately accounted, using best accounting 
procedures, this bill, as now presented, would actually cost the 
taxpayers money rather than make them money.
  I thank the Presiding Officer and yield the floor.
  The PRESIDING OFFICER. The assistant majority leader is recognized.
  Mr. DURBIN. Mr. President, I ask unanimous consent to speak for 10 
minutes.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. DURBIN. Mr. President, we are debating student loans. We are here 
having this debate because of Russia. How did that happen? It was 
October of 1957. The Russians launched a satellite called Sputnik. We 
did not have any satellites. We knew they had the bomb, and then they 
had the satellite. It scared us. It frightened Congress enough that 
they created the first student loan program. Oh, there were loans given 
to GIs coming back from the war, but this was a program available to 
those who were not veterans. They called it the National Defense 
Education Act. It was all about Americas defense. What they said was: 
We will loan money to students across America to go to college. I think 
their rationale was sound. If more Americans went to college and got 
educated, we would have the engineers and scientists we need to make 
this a strong nation from a defense point of view and from our economy 
point of view.
  So I thank the Russians for launching Sputnik, and I thank the 
Congress for creating the National Defense Education Act because a kid 
from East St. Louis, IL, whose parents had eighth grade educations, got 
a chance to go to college, and he is standing here today in the Senate.
  It was a pretty good deal too. The National Defense Education Act 
said: You can borrow money to go to school, and you do not have to pay 
it back until a year after you graduate--10 equal payments at 3-percent 
interest. I remember these because I was frightened to death in 1969, 
when I finished law school and added up all my student loans, and they 
said to me: You owe $8,500. I went home to my wife, and I said: We are 
doomed. We can't pay that back--$850 a year. It is impossible. It was 
not impossible. We did it. And many others did too.
  What happened as a result of that satellite and that student loan 
program was a dramatic change in higher education in America in the 
1960s and ever since. We democratized higher education. It used to be 
the only folks who went to college were the sons and daughters of 
alumni and those who were supersmart and rich. Well, kids like myself 
got a chance all across America.
  So now here we are today, many years later--some 50 years later--and 
we are talking about student loans for this generation of students. We 
have many choices before us. I happen to like the National Defense 
Education Act. I like holding interest rates at 3 percent. I like the 
payback terms. But the number of students taking out loans and the cost 
of higher education have reached a point where we cannot do that 
without some serious commitment of resources at the Federal level at a 
time when our budget problems do not give us much latitude and much 
opportunity.
  So I sat down with a number of my colleagues--Angus King, a new 
Senator from Maine, an Independent who sits on the Democratic side; Joe 
Manchin, a Democrat from West Virginia; Tom Carper, a Democrat from 
Delaware; and Tom Harkin, who is the chairman of the Health, Education, 
Labor, and

[[Page S5890]]

Pensions Committee, and is in charge of this subject matter. That was 
the Democratic side. On the Republican side: Lamar Alexander of 
Tennessee, Richard Burr of North Carolina, Tom Coburn of Oklahoma. It 
is a pretty diverse group.
  We hammered out a bipartisan answer to dealing with student loans 
that will be the last vote today. We will have a series of votes. That, 
I think, is the right answer because I think we have struck the right 
balance. There are many of my colleagues in the Democratic caucus who 
are still opposed to this bipartisan approach. Some of them believe--
and I do not quarrel with it--we should go back to the old days of the 
National Defense Education Act. We should be subsidizing the interest 
rates. We ought to be putting a substantial amount of money into 
keeping the cost of higher education low in terms of interest rates.
  I do not quarrel with that. I am a beneficiary of that type of 
approach and philosophy. But we have tried to pass that in the Senate 
several times with the leadership of Jack Reed of Rhode Island, and we 
cannot come up with 60 votes. We cannot come up with the supermajority 
we need to make this a viable alternative.
  So now we have to ask ourselves a very basic question: What will we 
do if we cannot have a subsidized Federal program? Well, I think what 
we have come up with is a good approach. What we have come up with says 
basically we are capping the interest rate any student will ever have 
to pay in undergraduate loans at 8.25 percent--8.25 percent--capped, no 
matter what happens to interest rates. And we are saying we are going 
to start at an interest rate that is even dramatically lower than the 
interest rate paid by students as of this moment. So if you vote 
against the bipartisan alternative on student loans, you are voting 
against an effort to bring student loan interest rates down from 6.8 
percent to 3.8 percent and you are voting against the cap on interest 
rates at 8.25 percent. I do not see how that is going to benefit 
students. If you were offered a new home mortgage, reducing your 
interest rate by 3 percent, you could not wait to go to closing--
right?--because the interest you are going to pay on your home goes 
down dramatically.
  Our bipartisan approach is going to reduce the interest rates paid by 
11 million students and for about two-thirds of them by 3 percent. And 
those who vote no, those who vote no to that approach, are saying: Keep 
it at 6.8 percent. How can that be good for students or their families? 
A cap of 8.25 percent on student loans for 10 years is a protection 
that says to students in the future: The highest interest rate you face 
is 8.25 percent.
  What does it mean in terms of savings? Our approach in the bipartisan 
bill means if you are an undergraduate student in America, over the 
next 4 years of your education, you will save between $2,189 and $3,191 
in interest not paid--interest not paid.
  So those who are going to vote against the bipartisan bill are saying 
to students: Keep the rate at 6.8 percent. Do not lower it. And pay 
between $2,000 and $3,000 more in interest over the next 4 years. With 
friends like that, students and their families--I will not finish the 
sentence. But people ought to think twice about this. We are giving 
students a lower interest rate and a guaranteed cap.
  It is not just for undergraduates. In the next 4 years, those who are 
in the graduate loan programs will save over $4,000 in interest with 
the bipartisan approach; and those in the parent loans will save over 
$2,000 in interest paid. So for 4 years this is a solid winner.
  In the effort of full disclosure and honesty, after 4 years, in the 
second 4 years, interest rates, we project, will be going up, and the 
cost of these loans go up.
  My position is, let's vote for this now, roll up our sleeves and make 
sure that 4 years from now we can replace it with something that is as 
good or better. But why stick people with 6.8 percent, when we can 
bring the loan rate down to 3.8 percent?
  At the end of the day, the groups that are supporting this bill are 
substantial: the American Council on Education, the American 
Association of Community Colleges, the National Association of 
Independent Colleges and Universities, Rock the Vote, the United States 
Student Association, and the Committee for a Responsible Federal 
Budget, because, you see, we are not adding to our budgetary woes here.
  We found out this program actually generates about $715 million more 
than the actual cost of loans, as we project them. I wish it were zero. 
But put it in perspective: $715 million over 10 years against the 
student loan program that will cost us $1.4 trillion.
  My colleague Senator King did an analysis, and I think he calculated 
it at .005 percent or somewhere in that range.
  Mr. KING. Three zeroes.
  Mr. DURBIN. So .0005 percent. Do you know what it means to the cost 
of a student loan--that $715 million I am talking about? Mr. President, 
on average $2.76 for each loan over the ten year period. So if you 
borrow $2,000 or $3,000, over the life of the loan you will pay $2.76 
more, but you will save $2,000 to $3,000 in interest.
  For those who argue that $715 million is a deal killer, it is not. I 
wish it were zero, but it should not stop us. If you are frustrated 
with the current situation, if you think there ought to be a different 
student loan program, work to change it. But do not be supporting a 
position which raises interest rates on the students who are struggling 
to get by. Do not be voting against the bipartisan bill that puts a cap 
on these student loan interest rates.
  Let's roll up our sleeves in the next 4 years. Let's make sure we 
continue affordable interest rates for students.
  Mr. President, how much time do I have remaining?
  The PRESIDING OFFICER. The Senator's time has expired.
  Mr. DURBIN. Mr. President, I yield the floor.
  I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. HARKIN. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. HARKIN. Mr. President, I spoke on the floor earlier today about 
the proposal that is before us. I wish to reiterate what I said then: I 
cannot stress enough that this bill represents a number of compromises 
made on both sides to come to a solution on how to keep interest rates 
low for students in the coming years. The compromise we will be voting 
on shortly is the closest we have gotten to a deal that represents two 
core Democratic principles related to student loan interest rates: No. 
1, the inclusion of hard, upfront caps for students, so should we 
experience high interest rates in the future, they will be protected 
from those high rates.
  Let me repeat. Under this plan, undergraduates in this country will 
never pay more than 8.25 percent. That is what we had in the 1990s, and 
five times we bumped up against that in the 1990s. History could well 
repeat itself in that regard.
  We have a hard cap. Graduate students will pay no more than 9.5 
percent; parents and graduate students taking out PLUS loans, no more 
than 10.5 percent--hard cap.
  Secondly, we wanted this to come as close to deficit neutral as 
possible, and this is what we have done.
  To show how we made compromises around here, I will say that the 
Republicans' initial proposal that we had voted on here--and it went 
down, as well as the initial Democratic Senate proposal went down--the 
Senate Republicans' initial proposal raised $15.6 billion in deficit 
reduction over 10 years. We negotiated down to $715 million over 10 
years. Put that in context. Over the next 10 years the student loan 
program will probably loan out somewhere in the neighborhood of $1.4 to 
$1.5 trillion. What we are talking about is only $715 million over the 
next 10 years. That is the closest we could come to zero and at the 
same time have hard caps and keep interest rates low.
  I can't stress enough that this is a true compromise. If I were to 
write it, I would write it differently, and I have expressed myself in 
votes on the Senate floor in the past. But we have to deal with the art 
of the possible and reach compromises that answers both what the 
Republicans sought to do and what we sought to do.
  I would also reiterate that this is not the end of the conversation. 
It is the beginning.

[[Page S5891]]

  As important as student loans are--Stafford loans so students are 
able to get an education and their parents being able to afford it--as 
important as that is, it is only one part of the jigsaw puzzle that is 
college affordability.
  In 4 months, when the GAO report comes back--and I will again repeat 
that one of the elements we got in this compromise was a requirement 
that the GAO do a study on student loans, what the real cost is to the 
government, what the real cost is to administer that, and get that back 
to us in 4 months. When we are in our committee reauthorizing the 
Higher Education Act, we can take that into account.
  My good friend from Maine, who has been so instrumental in working 
out this agreement, has said many times that the rule book we have to 
go on is CBO estimates. I have been here long enough to see how many 
mistakes CBO has made in the past. We don't know if they are right. We 
have no way of knowing that. We also don't know what those interest 
rates are going to be in the future, and we don't know if a 2.05 add-on 
or 3.6 add-on is the right thing. We don't know. That is why we have 
required the GAO to give us an in-depth study so we can have a better 
handle on the cost to the government, what it costs to administer the 
program and all of its elements. We will take that into account.
  I was pleased to hear, again, Senator Alexander, my good friend and 
ranking member on our committee, earlier today on the floor. He 
expressed the same commitment he has expressed to me personally that I 
mentioned today; that is, working together to get a reauthorization of 
the Higher Education Act done in this Congress. Senator Alexander is 
committed to that, and so am I.
  I might also add that I am pleased that President Obama has also said 
he is personally committed to working with us to get a Higher Education 
Act through and working with us to look at all of the college 
affordability issues. This was displayed in his speech today.
  This is just one element--an important element but only one element.
  I look forward to working with Senator Alexander, the White House, 
Secretary Duncan, the Department of Education, and members of my 
committee on the Democratic side to really look at all aspects of 
college affordability and how we are going to address this issue 
comprehensively.
  I again want to point out for the Record--because soon we will be 
voting--that there are two amendments that will be voted on. I think 
one is by Senator Reed of Rhode Island and the other is by Senator 
Sanders of Vermont, and then we will have our final passage, if I am 
not mistaken. I know the two amendments that have been offered--one by 
Senator Sanders and one by Senator Reid--look very nice, and I know 
many on my side will be tempted to vote for them, but I will not be 
voting for them. They look nice, they sound nice, they would be nice in 
a perfect world, but we have to deal with CBO estimates. Quite frankly, 
the cost of those amendments, as judged by CBO, is something we can't 
do. Again, they sound nice, they look nice, they might feel nice, but 
we can't do it. So I will be opposing those amendments. I will be 
opposing them because we can't do that at this time.
  What we can do is do the compromise we have reached. That is what we 
can do. And don't let anyone tell you this is a bad deal for students. 
This is not a bad deal for students. If we don't pass this, 
undergraduate students this year will pay 6.8 percent on their loans. 
With this bill, they will pay 3.86 percent. Tell me which is the best 
deal. Next year it is 4.26 percent, the year after that it is 5.4 
percent, and the year after that it is 6.29 percent. It doesn't get up 
to 7 percent for 4 years, if CBO is right. In any case, for the next 4 
years it is going to be lower than 6.8 percent for every undergraduate 
student in college.
  Don't let anybody tell you this isn't a good deal for students. It is 
a good deal for students. This is why today we received an endorsement 
by the United States Student Association endorsing this bill, endorsing 
the compromise. They are not walking away from it. The Leadership 
Conference on Civil and Human Rights has endorsed this bill. Any way 
you look at it, this is a good deal for students, and it is a good deal 
for their families. Don't let anybody tell you otherwise.
  Could there be a better deal? Well, I suppose. How about free money? 
That is always a good deal, free money. There is always something 
better out there. I say to my friends on the Democratic side, don't let 
the perfect be the enemy of the good. Yes, there is probably a more 
perfect thing we could do. We can't afford it. We don't have the CBO 
scoring that would allow us to do that. Plus, we need the votes of our 
colleagues on the Republican side, so that is why we have to have a 
compromise. That is the way this place should run--on compromises. 
Legitimate, yes, hard-fought-out, but good compromises.
  What Senator Manchin and Senator Burr have offered is that 
compromise--a good bill, a good, solid compromise, one that will make 
sure interest rates for undergraduate students will be lower for the 
next 4 years and under 6.8 percent. As Senator Alexander worked so hard 
to make sure we got into this compromise, when students get these loans 
at 3.68 percent this year, that is it for the life of the loan--that is 
a good deal--or next year at 4.26 percent or the next year at 5.24 
percent. That is a good deal. So don't let what you might think would 
be more perfect take you away from voting for this bill. This is a good 
bill.

  Again, I thank so many who are responsible for putting this together. 
I thank Senator Durbin, Senator Manchin, Senator King, and Senator 
Carper, who worked so hard through so many days and weeks to get this 
pulled together. Of course, I thank my ranking member and good friend 
Senator Alexander, who has been here from day one trying to find that 
sweet spot that we could all agree on and vote on. I thank Senator 
Coburn, Senator Burr, and all their staffs for all of their hard work 
and diligence in putting this proposal together. I thank President 
Obama and his team and Secretary Duncan and his team for working 
together, and all of our staffs.
  This is the best we could do on a compromise for students given all 
the various priorities of this side, that side, the White House, and 
everybody else. This is a good deal. We shouldn't turn it down.
  I will vote against the amendments offered by Senator Reed and 
Senator Sanders, well meaning though they are. As I said, they sound 
nice and they look pretty, but don't be lured into thinking that 
somehow that is going to happen. It is not. We have to stick with this 
compromise and get a good deal for the students, even though you may 
not think it is perfect. It is a good deal.
  I support the Bipartisan Student Loan Certainty Act. I encourage all 
of my colleagues to vote in favor of its passing and against amendments 
that would detract from it.
  Mr. President, I ask unanimous consent that all time be yielded back 
with the exception of 2 minutes equally divided prior to each vote.
  The PRESIDING OFFICER (Mr. Blumenthal). Without objection, it is so 
ordered.


                           Amendment No. 1778

  The PRESIDING OFFICER. Under the previous order, there will be 2 
minutes of debate equally divided prior to the vote in relation to 
amendment No. 1778, offered by the Senator from Rhode Island, Mr. Reed.
  The Senator from Rhode Island.
  Mr. REED. The Reed-Warren amendment would provide students and 
families with certainty by ensuring that interest rates will go no 
higher than they would under the current fixed rates in present law--
6.8 percent for student loans and 7.9 percent for PLUS loans. The 
amendment is fully paid for by a very small--about one-half of 1 
percent--surcharge on income over $1 million.
  We should do this for students all across the country, and we should 
do it not only for the students who might be going to college next year 
but for those who are in high school today and will face, as we know, 
predictably higher rates.
  A young man from Rhode Island wrote a letter to me. He said:

       My brother, who is in college, will be paying a lot of 
     money for college and he's worried he will have a hard time 
     paying the loan. I'm afraid that by the time I go to college, 
     loans will be so expensive that I will not be able to pay it 
     off. My parents help with paying for college but they might 
     not be able to help with a loan that big. I really want to be 
     able to go to college.


[[Page S5892]]


  For those young men and women who are in high school today or who are 
going to high school, we have to at least vote for this Reed-Warren 
amendment to make sure interest rates stay at least within the present 
bounds.
  With that, I urge a ``yes'' vote.
  The PRESIDING OFFICER. The Senator from Iowa.
  Mr. HARKIN. The Senator from Rhode Island knows I have the highest 
respect and affection for him. I might say that he makes excellent 
points.
  As I said earlier, this amendment looks good, looks pretty, sounds 
pretty, and might be nice in a perfect world, but that is not where we 
are. Like my colleagues, like Senator Reed, I want to make sure we are 
only asking students and families to pay as much interest as needed in 
order to properly administer the program and no more. Student loans 
should not be a profit center for the Federal Government. As I said 
earlier, that is why we put into our underlying bill, the Manchin-Burr 
bill, a requirement that GAO report back to us in 4 months as to what 
it actually costs. My good friend from Rhode Island doesn't know what 
it costs. I don't know what it costs. No one really knows what the cost 
of this is.
  As Senator Alexander said earlier, we are going to be looking at all 
of this in the Higher Education Act, what college affordability is.
  Let me repeat. Under the bill before us, students pay less interest 
rates than 6.8 percent until 2017.
  While the Reed bill may sound good, we are not there. We are not 
there to move on the Reed bill yet or anything like it. Plus, the 
offset he has for that, even though he has fully paid for it, is not 
acceptable to a lot of people here in the Senate Chamber.
  Stick with the underlying bill and defeat the Reed amendment.
  The PRESIDING OFFICER. Under the previous order, the question is on 
agreeing to the Reed-Warren amendment.
  Mr. REED. I ask for the yeas and nays.
  The PRESIDING OFFICER. Is there a sufficient second?
  There appears to be a sufficient second.
  The clerk will call the roll.
  The legislative clerk called roll
  Mr. DURBIN. I announce that the Senator from Missouri (Mrs. 
McCaskill) is necessarily absent.
  The PRESIDING OFFICER. Are there any other Senators in the Chamber 
desiring to vote?
  The result was announced--yeas 46, nays 53, as follows:

                      [Rollcall Vote No. 183 Leg.]

                                YEAS--46

     Baldwin
     Baucus
     Begich
     Bennet
     Blumenthal
     Boxer
     Brown
     Cantwell
     Cardin
     Casey
     Coons
     Durbin
     Feinstein
     Franken
     Gillibrand
     Hagan
     Heinrich
     Heitkamp
     Hirono
     Johnson (SD)
     Klobuchar
     Landrieu
     Leahy
     Levin
     Markey
     Menendez
     Merkley
     Mikulski
     Murphy
     Murray
     Nelson
     Reed
     Reid
     Rockefeller
     Sanders
     Schatz
     Schumer
     Shaheen
     Stabenow
     Tester
     Udall (CO)
     Udall (NM)
     Warner
     Warren
     Whitehouse
     Wyden

                                NAYS--53

     Alexander
     Ayotte
     Barrasso
     Blunt
     Boozman
     Burr
     Carper
     Chambliss
     Chiesa
     Coats
     Coburn
     Cochran
     Collins
     Corker
     Cornyn
     Crapo
     Cruz
     Donnelly
     Enzi
     Fischer
     Flake
     Graham
     Grassley
     Harkin
     Hatch
     Heller
     Hoeven
     Inhofe
     Isakson
     Johanns
     Johnson (WI)
     Kaine
     King
     Kirk
     Lee
     Manchin
     McCain
     McConnell
     Moran
     Murkowski
     Paul
     Portman
     Pryor
     Risch
     Roberts
     Rubio
     Scott
     Sessions
     Shelby
     Thune
     Toomey
     Vitter
     Wicker

                             NOT VOTING--1

       
     McCaskill
       
  The PRESIDING OFFICER. Under the previous order requiring 60 votes 
for the adoption of this amendment, the amendment is rejected.


                           Amendment No. 1774

  Under the previous order, there will now be 2 minutes of debate 
equally divided prior to a vote on amendment No. 1774, offered by the 
Senator from Vermont [Mr. Sanders].
  Mr. SANDERS. Mr. President, I want to thank Senators Leahy, Wyden, 
Brown, Whitehouse, Gillibrand, Merkley, Blumenthal, Schatz, Murphy, and 
Hirono for supporting this amendment. I also wish to thank the NEA and 
the AFT, the two largest teachers organizations in the country, for 
supporting this amendment.
  This amendment is very simple. It sunsets this legislation after 2 
years, takes advantage of current, relatively low interest rates, and 
gives us the time to reauthorize the Higher Education Act and come up 
with sensible long-term solutions to the crisis of student indebtedness 
and college affordability.
  According to the CBO, by the year 2018, under this legislation 
undergraduate Stafford loans will be 7.25 percent, graduate Stafford 
loans will be 8.8 percent, and parent loans will be 9.7 percent. We 
have a crisis right now in student indebtedness. We need to solve that 
crisis, not make it worse.
  I ask for support of this amendment.
  The PRESIDING OFFICER. The Senator from Iowa.
  Mr. HARKIN. Mr. President, I can't support this amendment. By 
sunsetting this effort 2 years because CBO uses a 10-year window, the 
amendment would cost an estimated above $20 billion, and there is no 
offset to pay for it. So, again, the lack of that offset would violate 
the agreement we made under our bipartisan agreement of trying to get 
as close to deficit neutrality as possible.
  Like Senator Sanders, I also want to make sure we make any needed 
changes to student loan interest rates before they become too high. Let 
me remind everyone, in the 1990s we had an 8.25-percent cap. We hit it 
five times. We got back in this agreement an 8.25-percent absolute cap.
  Beyond that, for the next 4 years every student--subsidized and 
unsubsidized--in college will have a lower interest rate than 6.8 
percent. In the outyears, who knows what the interest rates are going 
to be. We don't know that, and neither does CBO. But we do know what 
they are going to be this year and probably next year, and the students 
get a much better deal under the compromise.
  So I say, don't support the Sanders amendment. Let's vote and let's 
keep the compromise in place and give our students a good deal, this 
year and next year and the year after and keep that 8.25-percent cap 
that we negotiated.
  The PRESIDING OFFICER. The question is on agreeing to the amendment.
  Mr. SANDERS. I ask for the yeas and nays.
  The PRESIDING OFFICER. The yeas and nays have been requested. Is 
there a sufficient second?
  There appears to be a sufficient second.
  The clerk will call the roll.
  The legislative clerk called the roll.
  Mr. DURBIN. I announce that the Senator from Missouri (Mrs. 
McCaskill) is necessarily absent.
  The PRESIDING OFFICER. Are there any other Senators in the Chamber 
desiring to vote?
  The result was announced--yeas 34, nays 65, as follows:

                      [Rollcall Vote No. 184 Leg.]

                                YEAS--34

     Baldwin
     Baucus
     Begich
     Blumenthal
     Boxer
     Brown
     Cantwell
     Cardin
     Coons
     Franken
     Gillibrand
     Hirono
     Johnson (SD)
     Klobuchar
     Leahy
     Levin
     Markey
     Menendez
     Merkley
     Mikulski
     Murphy
     Nelson
     Reed
     Reid
     Rockefeller
     Sanders
     Schatz
     Schumer
     Shaheen
     Stabenow
     Udall (NM)
     Warren
     Whitehouse
     Wyden

                                NAYS--65

     Alexander
     Ayotte
     Barrasso
     Bennet
     Blunt
     Boozman
     Burr
     Carper
     Casey
     Chambliss
     Chiesa
     Coats
     Coburn
     Cochran
     Collins
     Corker
     Cornyn
     Crapo
     Cruz
     Donnelly
     Durbin
     Enzi
     Feinstein
     Fischer
     Flake
     Graham
     Grassley
     Hagan
     Harkin
     Hatch
     Heinrich
     Heitkamp
     Heller
     Hoeven
     Inhofe
     Isakson
     Johanns
     Johnson (WI)
     Kaine
     King
     Kirk
     Landrieu
     Lee
     Manchin
     McCain
     McConnell
     Moran
     Murkowski
     Murray
     Paul
     Portman
     Pryor
     Risch
     Roberts
     Rubio
     Scott
     Sessions
     Shelby
     Tester
     Thune
     Toomey
     Udall (CO)
     Vitter
     Warner
     Wicker

                             NOT VOTING--1

       
     McCaskill
       
  The PRESIDING OFFICER. Under the previous order requiring 60 votes

[[Page S5893]]

for the adoption of this amendment, the amendment is rejected.
  The majority leader.
  Mr. REID. We will likely have one more vote tonight, and then Senator 
Murray and Senator Collins will determine what is going to happen on 
the appropriations bill that is before us.


                      Orrin Hatch's 13,000th Vote

  Mr. President, I rise now to honor our colleague Orrin Hatch. The 
next vote cast will be Orrin Hatch's 13,000th vote. This is a 
tremendous accomplishment. It speaks to his dedication to the State of 
Utah, his constituents, the Senate, and our country. He is the 
Republicans' most senior Member. He is now serving in his seventh term 
in the Senate. Before running for the Senate, Senator Hatch received a 
bachelor's degree from Brigham Young University, a law degree from the 
University of Pittsburgh, and was in private practice for a number of 
years.
  He is the ranking member on the Finance Committee today. As we know, 
he made a reputation for himself when he was chair of the Judiciary 
Committee. We worked together with him for those many years. He serves 
on the HELP Committee and the Joint Committee on Taxation. He has truly 
had a significant impact on the Senate.
  He is a dedicated member of the board of directors of the Holocaust 
Memorial Museum. He has done amazing work throughout his career.
  His No. 1 accomplishment for me is not how many terms he has served 
in the Senate but his accomplishment for his wonderful family. His wife 
Elaine has been a great helpmate for him for these many decades. He has 
23 grandchildren, 6 children, and now 10 great-grandchildren.
  Although Orrin and I occasionally disagree on substantive issues, I 
have great respect for him. I am so grateful to him over the years for 
always expressing concern about me personally and his kindness and 
concern to my family, especially to Landra.
  Congratulations.
  The PRESIDING OFFICER. The Republican leader.
  Mr. McCONNELL. The senior Senator from Utah will not be known for the 
quantity of his votes but for the quality of his work. He is a man of 
extraordinary character. We are happy to have this intermission to 
congratulate him on yet another accomplishment in a long and 
outstanding career in the Senate.


               orrin hatch's 13,000th vote in the senate

  Mr. HATCH. Mr. President, I have just cast 13,000th vote here in the 
Senate. I have to admit that I never thought I would cast so many 
votes, but I'm grateful that I have had the opportunity to serve the 
good people of Utah long enough to reach this milestone.
  That said, I am not really one to dwell on the past. I have a lot 
more work here to do and a lot more votes to cast before I am done.
  But, I do want to thank both the distinguished majority and minority 
leaders for their kind words this evening and for being gracious enough 
to take the time to mark this occasion. I have known these good 
Senators a long time and I am proud to call both of them my friends.
  I am grateful for all of the friends and colleague I have made here 
in the Senate. They make it a great place to work.


                           Amendment No. 1773

  The PRESIDING OFFICER. Under the previous order, there will be 2 
minutes of debate prior to a vote in relation to amendment No. 1773, 
offered by the Senator from Iowa, Mr. Harkin.
  The Senator from Rhode Island.
  Mr. REED. Mr. President, a point of order. I believe we are prepared 
to voice vote this, and at the proper time I ask that such a motion be 
made.
  The PRESIDING OFFICER. The Senator from West Virginia.
  Mr. MANCHIN. Mr. President, we can fix our student loan program with 
a ``yes'' vote on the bipartisan legislation to lower interest rates 
for all student borrowers. The bipartisan Student Loan Certainty Act is 
a long-term fix that is fair, equitable, financially sustainable, and 
fiscally responsible.
  This compromise will save students $8 billion in interest this school 
year which translates to $31 billion in savings over the next 4 years. 
That means a savings of $2,000 in interest for the average freshman 
student who starts college this year. A ``no'' vote will prevent our 
students from realizing this savings.
  There is simply no better investment we can make than the education 
of our children and grandchildren. I urge my colleagues to make that 
investment and vote to support this long-term bipartisan fix.
  The PRESIDING OFFICER. The Senator from Rhode Island.
  Mr. REED. Mr. President, I oppose the proposed amendment. It is 
short-term rate relief, but it is long-term rate pain for thousands of 
students and families across the country. We can do much better than 
that. In a few moments, we will have an opportunity after the voice 
vote to have another small discussion prior to final passage.
  Again, I believe this amendment is not--despite the best work and 
best intentions and great effort by my colleagues--the best work we can 
do with respect to students and families.
  The PRESIDING OFFICER. The Senator from West Virginia.
  Mr. MANCHIN. First of all, I respect my colleague, and we just have a 
difference of opinion, but we are still going to work together on 
everything we possibly can to make it better.
  It is my understanding that we will be able to adopt the amendment by 
a voice vote since we will be having a rollcall vote on passage of the 
bill as amended with this language.
  I ask unanimous consent to extinguish the previous order requiring a 
60-vote threshold for this amendment.
  The PRESIDING OFFICER. Is there objection? Without objection, it is 
so ordered.
  The question is on agreeing to the amendment.
  The amendment (No. 1773) was agreed to.
  The PRESIDING OFFICER. Under the previous order, there will be 2 
minutes of debate equally divided prior to a vote on passage of H.R. 
1911, as amended.
  Who yields time?
  The Senator from Iowa.
  Mr. HARKIN. Mr. President, the vote comes on what we are going to do 
and that is--as my good friend Senator Manchin said--to keep interest 
rates low for students.
  What this means for our students is that the student loans for all 
undergraduate students will be reduced from 6.8 percent to 3.86 percent 
this year. It will be lower than 6.8 percent for the next 4\1/2\--
almost 5--years.
  Do our students and our families a favor. Vote for final passage. 
Keep the interest rates low and make sure our students are not paying a 
6.8-percent interest rate this year, next year, and the year beyond.
  The PRESIDING OFFICER. The Senator from Rhode Island.
  Mr. REED. Mr. President, as I indicated previously with respect to 
the amendment proposed by Senator Manchin, this proposal will provide 
short-term rate relief but lock in long-term rate pain for thousands of 
families and students across the country. It also represents the 
fundamental shift in our approach to student lending. It goes from 
investing in students and in our future economy to making those 
students be profit centers for the Federal Government. There is an 
estimated $184 billion over 10 years of profit in the current baseline. 
It is the difference between the cost of funding and the revenue paid 
by the students to the Federal Government. This proposal adds $715 
million to that.
  Also, we have done nothing to address the $1 trillion of outstanding 
debt that students face today. This measure will add to that debt.
  Education has always been the engine of opportunity in this country. 
With this legislation, that engine will leave the station with many 
fewer students aboard.
  I urge a ``no'' vote.
  The PRESIDING OFFICER. Under the previous order, the clerk will read 
the title of the bill for a third time.
  The amendment was ordered to be engrossed and the bill to be read a 
third time.
  The bill was read a third time.
  The PRESIDING OFFICER. The bill having been read the third time, 
under the previous order the question is, Shall the bill pass?
  Mr. REID. Mr. President, I ask for the yeas and nays.

[[Page S5894]]

  The PRESIDING OFFICER. Is there a sufficient second?
  There is a sufficient second.
  The clerk will call the roll.
  The bill clerk called the roll.
  Mr. DURBIN. I announce that the Senator from Missouri (Mrs. 
McCaskill) is necessarily absent.
  The PRESIDING OFFICER. Are there any other Senators in the Chamber 
desiring to vote?
  The result was announced--yeas 81, nays 18, as follows:

                      [Rollcall Vote No. 185 Leg.]

                                YEAS--81

     Alexander
     Ayotte
     Barrasso
     Baucus
     Begich
     Bennet
     Blunt
     Boozman
     Burr
     Cantwell
     Carper
     Casey
     Chambliss
     Chiesa
     Coats
     Coburn
     Cochran
     Collins
     Coons
     Corker
     Cornyn
     Crapo
     Cruz
     Donnelly
     Durbin
     Enzi
     Feinstein
     Fischer
     Flake
     Franken
     Graham
     Grassley
     Hagan
     Harkin
     Hatch
     Heinrich
     Heitkamp
     Heller
     Hoeven
     Inhofe
     Isakson
     Johanns
     Johnson (SD)
     Johnson (WI)
     Kaine
     King
     Kirk
     Klobuchar
     Landrieu
     Levin
     Manchin
     McCain
     McConnell
     Merkley
     Mikulski
     Moran
     Murkowski
     Murray
     Nelson
     Paul
     Portman
     Pryor
     Reid
     Risch
     Roberts
     Rockefeller
     Rubio
     Schatz
     Schumer
     Scott
     Sessions
     Shaheen
     Shelby
     Tester
     Thune
     Toomey
     Udall (CO)
     Vitter
     Warner
     Wicker
     Wyden

                                NAYS--18

     Baldwin
     Blumenthal
     Boxer
     Brown
     Cardin
     Gillibrand
     Hirono
     Leahy
     Lee
     Markey
     Menendez
     Murphy
     Reed
     Sanders
     Stabenow
     Udall (NM)
     Warren
     Whitehouse

                             NOT VOTING--1

       
     McCaskill
       
  The PRESIDING OFFICER. The 60-vote threshold having been achieved on 
this bill, the bill, as amended, is passed.
  The bill (H.R. 1911), as amended, is as follows:

                               H.R. 1911

       Resolved, That the bill from the House of Representatives 
     (H.R. 1911) entitled ``An Act to amend the Higher Education 
     Act of 1965 to establish interest rates for new loans made on 
     or after July 1, 2013, to direct the Secretary of Education 
     to convene the Advisory Committee on Improving Postsecondary 
     Education Data to conduct a study on improvements to 
     postsecondary education transparency at the Federal level, 
     and for other purposes.'', do pass with the following 
     amendment:
       Strike all after the first word and insert the following:

     1. SHORT TITLE.

       This Act may be cited as the ``Bipartisan Student Loan 
     Certainty Act of 2013''.

     SEC. 2. INTEREST RATES.

       (a) Interest Rates.--Section 455(b) of the Higher Education 
     Act of 1965 (20 U.S.C. 1087e(b)) is amended--
       (1) in paragraph (7)--
       (A) in the paragraph heading, by inserting ``and before 
     july 1, 2013'' after ``on or after july 1, 2006'';
       (B) in subparagraph (A), by inserting ``and before July 1, 
     2013,'' after ``on or after July 1, 2006,'';
       (C) in subparagraph (B), by inserting ``and before July 1, 
     2013,'' after ``on or after July 1, 2006,''; and
       (D) in subparagraph (C), by inserting ``and before July 1, 
     2013,'' after ``on or after July 1, 2006,'';
       (2) by redesignating paragraphs (8) and (9) as paragraphs 
     (9) and (10), respectively; and
       (3) by inserting after paragraph (7) the following:
       ``(8) Interest rate provisions for new loans on or after 
     july 1, 2013.--
       ``(A) Rates for undergraduate fdsl and fdusl.--
     Notwithstanding the preceding paragraphs of this subsection, 
     for Federal Direct Stafford Loans and Federal Direct 
     Unsubsidized Stafford Loans issued to undergraduate students, 
     for which the first disbursement is made on or after July 1, 
     2013, the applicable rate of interest shall, for loans 
     disbursed during any 12-month period beginning on July 1 and 
     ending on June 30, be determined on the preceding June 1 and 
     be equal to the lesser of--
       ``(i) a rate equal to the high yield of the 10-year 
     Treasury note auctioned at the final auction held prior to 
     such June 1 plus 2.05 percent; or
       ``(ii) 8.25 percent.
       ``(B) Rates for graduate and professional fdusl.--
     Notwithstanding the preceding paragraphs of this subsection, 
     for Federal Direct Unsubsidized Stafford Loans issued to 
     graduate or professional students, for which the first 
     disbursement is made on or after July 1, 2013, the applicable 
     rate of interest shall, for loans disbursed during any 12-
     month period beginning on July 1 and ending on June 30, be 
     determined on the preceding June 1 and be equal to the lesser 
     of--
       ``(i) a rate equal to the high yield of the 10-year 
     Treasury note auctioned at the final auction held prior to 
     such June 1 plus 3.6 percent; or
       ``(ii) 9.5 percent.
       ``(C) PLUS loans.--Notwithstanding the preceding paragraphs 
     of this subsection, for Federal Direct PLUS Loans, for which 
     the first disbursement is made on or after July 1, 2013, the 
     applicable rate of interest shall, for loans disbursed during 
     any 12-month period beginning on July 1 and ending on June 
     30, be determined on the preceding June 1 and be equal to the 
     lesser of--
       ``(i) a rate equal to the high yield of the 10-year 
     Treasury note auctioned at the final auction held prior to 
     such June 1 plus 4.6 percent; or
       ``(ii) 10.5 percent.
       ``(D) Consolidation loans.--Notwithstanding the preceding 
     paragraphs of this subsection, any Federal Direct 
     Consolidation Loan for which the application is received on 
     or after July 1, 2013, shall bear interest at an annual rate 
     on the unpaid principal balance of the loan that is equal to 
     the weighted average of the interest rates on the loans 
     consolidated, rounded to the nearest higher one-eighth of one 
     percent.
       ``(E) Consultation.--The Secretary shall determine the 
     applicable rate of interest under this paragraph after 
     consultation with the Secretary of the Treasury and shall 
     publish such rate in the Federal Register as soon as 
     practicable after the date of determination.
       ``(F) Rate.--The applicable rate of interest determined 
     under this paragraph for a Federal Direct Stafford Loan, a 
     Federal Direct Unsubsidized Stafford Loan, or a Federal 
     Direct PLUS Loan shall be fixed for the period of the 
     loan.''.
       (b) Effective Date.--The amendments made by subsection (a) 
     shall take effect as if enacted on July 1, 2013.

     SEC. 3. BUDGETARY EFFECTS.

       (a) Paygo Scorecard.--The budgetary effects of this Act 
     shall not be entered on either PAYGO scorecard maintained 
     pursuant to section 4(d) of the Statutory Pay- As-You-Go Act 
     of 2010.
       (b) Senate Paygo Scorecard.--The budgetary effects of this 
     Act shall not be entered on any PAYGO scorecard maintained 
     for purposes of section 201 of S. Con. Res. 21 (110th 
     Congress).

     SEC. 4. STUDY ON THE ACTUAL COST OF ADMINISTERING THE FEDERAL 
                   STUDENT LOAN PROGRAMS.

       Not later than 120 days after the date of enactment of this 
     Act, the Comptroller General of the United States shall--
       (1) complete a study that determines the actual cost to the 
     Federal Government of carrying out the Federal student loan 
     programs authorized under title IV of the Higher Education 
     Act of 1965 (20 U.S.C. 1070 et seq.), which shall--
       (A) provide estimates relying on accurate information based 
     on past, current, and projected data as to the appropriate 
     index and mark-up rate for the Federal Government's cost of 
     borrowing that would allow the Federal Government to 
     effectively administer and cover the cost of the Federal 
     student programs authorized under title IV of the Higher 
     Education Act of 1965 (20 U.S.C. 1070 et seq.) under the 
     scoring rules outlined in the Federal Credit Reform Act of 
     1990 (2 U.S.C. 661 et seq.);
       (B) provide the information described in this section in a 
     way that separates out administrative costs, interest rate, 
     and other loan terms and conditions; and
       (C) set forth clear recommendations to the relevant 
     authorizing committees of Congress as to how future 
     legislation can incorporate the results of the study 
     described in this section to allow for the administration of 
     the Federal student loan programs authorized under title IV 
     of the Higher Education Act of 1965 (20 U.S.C. 1070 et seq.) 
     without generating any additional revenue to the Federal 
     Government except revenue that is needed to carry out such 
     programs; and
       (2) prepare and submit a report to the Committee on Health, 
     Education, Labor, and Pensions of the Senate and the 
     Committee on Education and the Workforce of the House of 
     Representatives setting forth the conclusions of the study 
     described in this section in such a manner that the 
     recommendations included in the report can inform future 
     reauthorizations of the Higher Education Act of 1965 (20 
     U.S.C. 1001 et seq.).

  The PRESIDING OFFICER. The Senator from Arkansas.

                          ____________________